SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated
27 MARCH 2003
AngloGold Limited
_
(Name of Registrant)
11 Diagonal Street
Johannesburg, 2001
(P O Box 62117)
Marshalltown, 2107
South Africa____
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F: Form 40-F:
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes:
No:
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes:
No:
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes:
No:
Enclosures:
2002 ANNUAL REPORT TO SHAREHOLDERSTOGETHER WITH NOTICE OF MEETING
1
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Key features - 2002
THE FOLLOWING EXCHANGE RATES WERE USED AS A BASIS FOR CALCULATIONS IN THIS DOCUMENT
2
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Corporate
profile
Brazil
Argentina
Serra Grande
Cerro Vanguardia
Morro Velho
USA
Jerritt
Canyon
Cripple Creek
& Victor
Mali
Tanzania
Namibia
Geita
Sadiola
Yatela
Morila
Navachab
SA operations
South Africa
Union Reefs
Sunrise Dam
Australia
3
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Contents
4
Letter from the Chairman and Deputy Chairman Chairman Russell Edey and Deputy Chairman James Motlatsi share their views with shareholders.
6
Delivering on our promises
7
One-year forecast 2003
8
Interview with the CEO Journalist Alec Hogg interviews CEO Bobby Godsell on AngloGold, gold and other issues.
12
Group value-added statement
13
Review of the gold market Marketing Director Kelvin Williams discusses the renewed support for gold, its performance during 2002 and the outlook for 2003.
14
Financial review
17
Group operating and financial results
18
Review of operations A solid performance for the year reviewed by region.
46
Marketing AngloGold believes in gold and is committed to growing this market.
48
Exploration Focused, yet extensive exploration in 10 countries. Read more.
52
Mineral Resources and Ore Reserves
54
Directors and executive management
56
Directors' approval Secretary's certificate Report of the independent auditors
57
Corporate governance AngloGold is committed to attaining the highest levels of corporate governance.
63
Remuneration report
64
Directors' report
74
Group financial statements
112
Company financial statements
131
Investment in principal subsidiaries and joint venture interests
132
US GAAP consolidated financial statements For the first time, an analysis in terms of US GAAP.
138
Glossary of terms
140
Shareholders' information
143
Directorate and administration
144
Contact information
Inside back cover
Other reports and sources of information
"The best news of 2002 is that the higher
Rand gold price has liberated a whole
lot of reserves in South Africa.
We are looking at six new projects
contributing 11Moz."
BOBBY GODSELL, ANGLOGOLD CEO Page 8
4.5Moz of new production at Moab Khotsong Page 28
Russell Edey, Chairman
James Motlatsi, Deputy Chairman
Letter from the
Chairman and Deputy Chairman
ANGLO GOLD LIMITED ANNUAL REPORT 2002
4
(Clockwise from top left) Tshepo Shale, a loco driver, Projek Katleho Great Noligwa, South Africa; Jannie Schnaar and Kobus Jacobs, Great Noligwa,
South Africa; Waltinho Correina Gonzaga and Leoncio Jos Arajo Costa at Serra Grande in Brazil, South America; Nolast Marebexeni is an onsetter's assistant
at Savuka, South Africa; Stuart Foya, a geochemist with the East and West Africa region, in the Morila pit; Heidi van Wyk, Moab Khotsong, South Africa.
A
Delivering
on our promises
ANGLO GOLD LIMITED ANNUAL REPORT 2002
6
What we promised for 2002
Commitment to long-term target of eliminating all accidents at work.
Growing the company into the gold equity of choice and an investment that offers its shareholders competitive returns:
* Drive the company down the cost curve
* Seek organic growth
* Continue near-mine or brownfields exploration
* Develop new greenfields exploration projects
* Apply a disciplined acquisition strategy
* Seek value down the gold chain
Reducing Rand-price cover by restructuring the hedge book
What we delivered in 2002
Long-term trend in lost time injuries decreased to 8.86 per million man hours, the lowest ever for AngloGold.
During 2002, AngloGold was one of the top-performing resource stocks in the world. The company consistently rewards shareholders with a strong dividend flow. Its performance during 2002 represents a total return to shareholders a combination of share price performance and dividend of 98% in Dollar terms.
Total cash costs continued to decline from $178/oz by 10% to $161/oz despite the impact of the strengthening Rand on the South African operations.
Three new South Africa projects, at Moab Khotsong, TauTona and Mponeng are on schedule. Sunrise Dam Expansion is complete, with the CC&V project nearing completion.
The AngloGold growth story continues, with 11.4Moz of new resources added at a cost of $1.60/oz and 3.2Moz of new reserves at a cost of $4.40/oz.
Exploration is continuing in countries in which AngloGold has operations, namely Argentina, Brazil, Tanzania, Mali, South Africa and the United States, as well as in prospective areas in Alaska, Canada and Peru. Some $19m was spent during the year.
AngloGold increased its stake from 46.25% to 92.5% in Cerro Vanguardia in Argentina during the year and continues to identify value-adding merger and acquisition opportunities.
AngloGold remains committed to developing the gold market. Following a number of notable successes during 2002 the Afridesia campaign, OroAfrica design centre, Riches of Brazil and Africa competitions, and the GoldAvenue catalogue development the company will continue its work with the World Gold Council but will also operate independently in the spheres where it has strategic influence.
AngloGold reduced its hedging contracts by some 133t during the year. The continuing strength of the gold price and the company's solid operating performance, has reduced the need to manage revenue through forward pricing and the hedge book will continue to be managed, restructured and reduced.
(The above figures are the year-on-year differences in reserves, including the effect of depletion)
Growing reserves
Some of the significant increases in ore reserves include:
Mponeng
increased by 4.6Moz mainly due to the inclusion of the Mponeng CLR and VCR below 120 level
Moab Khotsong
increased by 4.3Moz due to the inclusion of the Phase 2 project which will exploit the Vaal reef below 101 level
TauTona
increased by 0.8Moz due to the inclusion of the CLR below 120 level, the area East of the Bank Dyke on 116 level and the VCR area "A"
Savuka and Tau Lekoa
increased by 1.2Moz and 0.7Moz respectively owing to changes in mine design leading to additional life at both operations
Geita
increased by 0.8Moz due to the redesign of the Nyankanga, Geita Hill and Lone Cone pits, as well as the inclusion of the Chipaka, Area 3W and Roberts pits
Cerro Vanguardia
increased by 1.1Moz mainly as a result of AngloGold's increase in ownership to 92.5%.
7
ANGLO GOLD LIMITED ANNUAL REPORT 2002
One-year forecast - 2003
South
East and
South
North
Forecast
Actual
Forecast
Africa
West Africa
America
America
Australia
2003
2002
2002
Gold
Underground operations
Metric tonnes milled - 000
11,611
1,224
214
6
13,055
13,426
13,646
Yield
- g/t 8.16
7.18
7.64
5.11
8.06
8.27
8.29
Production
- oz 000
3,047
283
53
1
3,384
3,569
3,639
Productivity
g/employee
- actual 214
1,043
1,884
1,126
232
238
247
Surface and dump reclamation
Metric tonnes treated - 000
38,325
38,325
38,366
40,239
Yield
- g/t 0.23
0.23
0.30
0.23
Production
- oz 000
285
285
365
294
Open-pit operations
Metric tonnes treated - 000
8,727
1,057
18,416
5,332
33,532
27,186
30,378
Yield
- g/t
3.67
8.00
0.70
2.53
1.99
2.29
1.89
Production
- oz 000
1,031
272
414
433
2,150
2,005
1,848
Total
Production
- oz 000
3,332
1,031
555
467
434
5,819
5,939
5,781
Total cash costs
- $/oz produced
209
152
108
190
203
187
161
154
Capital
expenditure
- $ m
188
25
39
27
24
303
268
268
Rand/US Dollar average exchange rate
9.00
10.48
11.15
Alec Hogg: Surely the most relevant aspect of the year was the way the gold price improved, starting at under $280/oz and ending at $345/oz. Subsequent to year-end we have seen $390/oz. Is this sustainable?
Bobby Godsell: An element of it is sustainable. What pleases me is that the ghosts around the gold price have gone away. For over a decade-and-a-half people have argued that gold has lost its glister, that gold is no longer a store of value, that gold is something that only primitive people want and hold, that the Dollar will be strong forever, that US equity markets will grow by 30% a year forever. That has gone away.
To be truthful, I don't know what the equilibrium price is.I think it is still finding its place. I think the negative sentiment has gone away and that there's more upside than downside in the price. We never predict it.
Alec: Does a higher gold price change the way you run the business?
Bobby: The most immediate change is that our need for revenue and price certainty has diminished. That comes from two sources. At really low prices, you've got to secure particularly your marginal operations. At plus $300/oz, we have less need for hedging, so we've taken 300t out of our hedge and are more exposed to the upside. Equally our operations are running well and so we need less insurance.
The second major change and the best news of 2002 is that the higher Rand gold price has liberated a whole lot of reserves in South Africa. South African orebodies are more defined by exchange rates and gold prices than by geology. We are looking at six new projects contributing 11Moz. Suddenly our guys in South Africa are walking tall again, they can see expansion and growth. We've come to the end of contracting, selling and closing and are planning major, new 20-year long projects.
Bobby: I don't think we're ever going to become theological anti- hedgers. When we started five years ago it was a very gloomy time for a gold company. We said to investors, "give us your money and we'll make you rich". One of our arguments was that we were going to pay a decent dividend. Throughout that period, we paid a dividend that has fluctuated in Dollar yield terms between 4% and 7%. So anybody holding AngloGold shares has got a yield of at least 4% in cash, plus capital appreciation. To do this we needed a certain amount of revenue certainty.
I do think that excessive hedging has contributed to price weakness. Australian producers have hedged up to 100% of their reserves. That is excessive.
We don't want to be excessive hedgers; we don't want to sell everything at the spot perhaps somewhere in between.
Bobby: From a management perspective we ask ourselves two simple questions: What can we manage? What can't we manage?
Bobby: When we started seven years ago, we had two revolutionary ideas.
Interview with
Bobby Godsell
Chief Executive Officer
V
ANGLO GOLD LIMITED ANNUAL REPORT 2002
For over a decade-and-a-half people have argued that gold has lost its glister, that gold is no longer a store of value, that gold is something that only primitive people want and hold, that the Dollar will be strong forever, that US equity markets will grow by 30% a year forever. That has gone away.
8
We can't manage the price. We can't manage the exchange rate. What we can manage are the costs and so our target is that we will keep our cost increases in South Africa to two-thirds of the country's inflation rate.
INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER
9
ANGLO GOLD LIMITED ANNUAL REPORT 2002
First, that people should make money out of owning gold stocks in bad times as well as good. We say that at low gold prices we are going to generate cash, make profits and pay dividends. At high gold prices we are going to generate more cash, make more profit and pay better dividends. Last year our dividend was up by about 68% in Dollar terms.
We then said that to do this we are going to focus on making money rather than on size.
So we went from being the biggest producer to being the second or third biggest. We very consciously sold off and shut down low-margin, high-risk producers. This took a third of South African production out of our hands from 4.7Moz to 3.4Moz. Last year we produced 15% less gold and made 20% better headline earnings.
So it was a shift from volume to value. And it was very necessary. We had an asset portfolio that was exceedingly high risk, with very old mines, remnant mining, and variable grades. We now have a more stable asset base with diversity in mining type 40% outside of South Africa and 40% from surface and shallow operations.
Now we are looking at growth and it is still growth in earnings. What is true is that if you want to grow your earnings, you have also got to grow your volume of mining.
Alec: The strategy, though, must have taken some kind of a diversion with the disappointment of not being able to acquire Normandy? Bobby: Normandy would have been a company character- changing transaction. I regret very much we couldn't get it. The appeal for me of Normandy is that it would have combined the leading Australian and South African companies into one of such size, such robustness, with such a strong balance sheet and such good assets, that any North American investor would have had to take notice of it.
This is against a background where everybody says most mergers and acquisitions destroy wealth rather that create it. We certainly got to the point where, had we gone another five cents on our offer, we would have been destroying wealth.
What does please me is that since then our company has done
well. Our share has traded very well in the United States we now trade there in value terms, at five times what we do in Johannesburg. And our Johannesburg values haven't gone down; it's the US value that has gone up.
Alec:
An issue that affected all mining companies in South
Africa over the past year was the Mining Charter. You were
pretty involved.
Bobby: To achieve an industry that is broadly representative of
our country, that looks like South Africa, is a good thing. I have
been concerned that empowerment should be broad rather than
narrow, benefiting many rather than a few, and that it should be
real. You can put somebody's name on a transaction, but if they
don't really have anything at risk, then they aren't, in truth,
owners. We have to make more money in South Africa, not
merely redistribute it. So ownership as a generator of wealth
is important.
Against those criteria, the Charter looks to me to be very good. It covers a wide range of issues, things incidentally that AngloGold has been doing for a long time.
What the Charter is turning out to be is a test of the social licence. A business will only survive if it benefits all of its stakeholders over time if people, the community, customers, employees and shareholders are left better off having an association with the company. I think it's a very good document and is going to make the South African industry more competitive, not less, and lead to greater wealth creation, not less. To draw on the gene pool of 100% of South Africa, not just white males, has got to be a good thing.
Alec:
Out-and-out capitalists would disagree with the assertion that
inclusivity will make you more competitive.
Bobby: With respect, I think that out-and-out capitalists, unless
they're racists, have no reason to do this. Read the Charter,
sentence by sentence, and ask yourself the question: If this is
done well, if it's done in a real way, if it's done with integrity, will
this create more wealth or less wealth?
It's quite clear from the Charter that assets should change hands at fair market value. That phrase is used repeatedly. We have done three major empowerment transactions and sold off about a quarter of our production ounces. We haven't lost one cent in terms of value. There is no Father Christmas in this Charter, there's no giving things away.
Also, as we move to many more black managers, I expect those managers to perform. You can't put somebody in charge of a deep level gold mine unless he's really competent. Frankly, to have half of our managers able to speak fluent seSotho or Xhosa has got to lead to greater productivity. We know that when we combine literacy and new job structures, we see a 25% increase in the output of those teams.
Alec: What about the cost or the value of ounces in the ground? South African gold ounces have made progress compared to other parts of the world. But they do still lag?
Bobby: Gold companies trade at a premium to their net asset value. It's true that some of the North Americans trade at a larger premium. That premium is one of two things. It's either a bet on the gold price or it's the view that management is smart enough to buy new mines, prove up new reserves.
I am happy to accept the challenge for AngloGold that we will grow the company in terms of profitable ounces into the future. I am not terribly worried about competing with the North Americans.
Alec: Last year you said you were going to significantly increase your investment in exploration.
Bobby: We have, through two different strategies. Brownfields exploration means you are drilling for ounces where you already have infrastructure. They are very nice ounces because if you find more, you don't have to spend capital to sink the shaft or build the plant. Particularly with open-pit mining, companies often starve the brownfields budget and only drill to have the certainty for another six or 12 months of production. Every Dollar we spend in brownfields exploration wins reserve ounces. Our exploration budget is about $60m - two thirds of that is brownfields.
Greenfields is different. I can only explain it in non-technical terms. It's about God's sense of humour, because God put gold in interesting places. He didn't put it in Switzerland or Singapore. So we look for gold in new and interesting places we have just opened an office in Mongolia.
We have a map that tells us in terms of basic geological theory where you could expect major gold mineralisation through different mineralisation processes. It's a disappointing map, because a large part of the world is prospective. It would be super if you could only concentrate on two or three places. China
and India ought to be very prospective. Places that have been poorly surveyed, poorly explored, obviously hold quite a lot of potential. We are very excited about Peru, about the Great Lakes area of Africa.
In greenfields exploration you have to take some risks - you have got to try 20 things and expect 19 of them to fail.
Alec: Could there be another Wits Basin out there?
Bobby: It's hard to believe that it's entirely unique. We do understand the Basin extremely well. We have looked in other parts of the world; we understand the palaeontological and ageing-of-the-earth signmarks. It would be wonderful to find another. We are delighted to find any decent orebody that we can make money out of.
Alec: What about Australia? Do you think there could be a big find waiting there?
Bobby: We are very excited about two orebodies that we have interests in.
At Sunrise Dam mine, we have dramatically expanded the size of that open-pit operation and are immensely excited about the brownfields potential. Every time we put the drill down we come up with excellent results. I would be very surprised if we didn't significantly extend its life going forward.
The Boddington project is one of the largest and longest life
gold orebodies in the world. We share that with Newmont, who succeeded Normandy in ownership, and Newcrest, and we are trying to find the right model to expand it.
Alec: An area where you do have a distinct advantage that you have already turned to account is on the continent of Africa.
Bobby: It's our continent, it's our home. The great thing about South Africans is that they understand about cultural diversity. We are a world in one country and no manager can assume that he knows what the people who work with him think. He's got to take the effort to find out. It's been wonderful to see Afrikaners from the Free State go to Morila in Mali, an Islamic country, French-speaking, and turn out to be very good leaders of people.
Equally, we are completely committed to developing talent
from those countries. Mali has had no modern mining history. We are running three world-class mines there with overwhelmingly local people.
Alec: There's been criticism of South African gold companies for decades about not beneficiating. A couple of years ago you made a move into this field by the acquisition of a company called OroAfrica - a reconnaissance investment. How has that turned out?
Bobby: It has done pretty well. This was part of the journey we started on seven years ago.
It's very interesting that the first sentence of every conversation about gold is a conversation about price. It's indicative of an industry that hasn't grown up, because industries don't do well because of price, they do well because of profit. The auto industry and other industries are not fascinated by price. They are interested in sales, consumers and customers.
INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER
ANGLO GOLD LIMITED ANNUAL REPORT 2002
10
INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER
11
ANGLO GOLD LIMITED ANNUAL REPORT 2002
The gold industry is not very customer oriented. An industry that forgets its customers will, and deserves to, go out of business. The customers of gold are overwhelmingly people who buy jewellery - 80% of 4,000t of annual production goes into jewellery.
For the last five years we have been looking at the customer and we would like to be part of modernising gold jewellery. This is an industry that got stuck in the 19th century. Going into OroAfrica was to find out about the customer. Here we had a modern factory located in our own country, making particularly gold chain and other machine-initiated gold jewellery, earrings and pendants, in alliance with the leading Italian gold jewellery manufacturer (Filk). OroAfrica uses about 5t of gold a year; Filk uses about 70t of gold. It's huge business.
It's still early days. What we'd like to do for gold is to be the Benetton of the gold industry, to be the Starbucks of jewellery. Coffee drinking was in decline in the United States. People thought it was unhealthy. But Starbucks has come along and persuaded people to pay $3 for a cup of coffee with foam in it, when they could have the same thing for 50 cents. That completely changed the market and consumption is going up. That's what we want to do, we want to revolutionise what we offer our customers.
Alec: Starbucks has branded coffee. Can AngloGold brand gold?
Bobby: Starbucks has also reinvigorated the entire category. If you go to to any modern city, you will find 15 Starbucks look-alikes - a place that looks nice, where you can pay a very high price for a fancy cup of coffee and where you have to learn a new language to order it. They've invented a new experience.
We think we can re-invent gold jewellery, whether it is the AngloGold brand or anything else. Coming from where we do, we would very much like to have an African brand. But equally we have been experimenting with Brazilian jewellery.
Gold is about people, particularly in Africa, it's about peasant life, it's about kings, the country, something that has been around for 5,000 to 7,000 years; part of the earth; part of the rich cultural heritage. If we draw on that, we think we can put a jewellery offer in the marketplace which is distinctly different to the dull, 19th century jewellery store offer that we have had.
Alec: Looking ahead, is it a year when AngloGold shareholders can expect similar progress as in the year behind. Bobby: We have never been in the business of predicting the gold price and to some extent, inevitably, our equity price is linked to the gold price.
We are going to mine 6Moz of gold, we are going to mine it at a good cost, we are going to generate a lot of profit and we would be hoping to pay a really decent dividend. We hope that our price reflects the benefit of that, particularly over time.
We listed on the New York Stock Exchange in 1998 at $16 we - are now trading at around $32 so there has been good capital appreciation. Last year a holder of an AngloGold share would have seen a total return, including dividends, of close to 100%. Whether we are going to see the gold price shoot up as dramatically this year as it did last, I don't know. But what we can say to our shareholders is, "hold our shares, over time and at any moment in time, you have made good money". And at the very least, we are going to pay a good dividend.
Alec: If we speak in a year's time, strategically what milestones would you like to have behind you.
Bobby: Two major things:
I am assuming operational excellence; I am assuming we will mine gold very profitably.
Over and above that I would hope that we would be further
down the road in growing our ounces. We want to say to shareholders that this is not a wasting-asset industry. Your piece of AngloGold paper is worth something today, it will be worth something to you in five or 10 years' time, we would like you to leave it to your kids. We have got to grow our earnings.
Then I would love to have something dramatic and interesting to say about going downstream, modernising the customer base and finding ways to expand the jewellery market, maybe even making some money out of that side of the business.
Alec: And mergers and acquisitions?
Bobby: All the time and ongoing, but only if they add value. We haven't had a year where we haven't done something, but it is opportunistic. I hope that we have the courage to go after every deal and I hope we have the wisdom only to do those deals that make money for our shareholders.
The full interview is available in video, audio and transcript form on the AngloGold website
at www.anglogold.com
We are going to mine 6Moz of gold, we are going to mine it at a good cost, we are going to generate a lot of profit and we would be hoping to pay a really decent dividend. We hope that our price reflects the benefit of that, particularly over time.
12
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Group value-added statement
for the year ended 31 December 2002
Figures in US Dollars millions
Notes
%
2002
%
2001*
Value added Turnover
2
1,761
2,041
Less: Purchases of goods and services in order to operate mines and produce refined metal, including market development costs net of other income
(611)
(746)
Value added by operations
90
1,150
98
1,295
Non-hedge derivatives
7
92
(5)
Income from investments and interest received
6
3
43
2
26
100
1,285
100
1,316
Value distributed Employees Salaries, wages and other benefits
10
35
443
48
627
Government
11
13
165
8
111
- Current taxation
14
177
8
103
- Deferred taxation
(1)
(12)
8
Providers of capital
- Finance costs
8
3
44
5
72
- Dividends
13
20
251
13
167
- Minorities
1
15
1
8
Other
- Loss on disposal of mines
31
1
13
4
Total value distributed
73
931
75
989
Re-invested in the Group
- Amortisation and depreciation
14, 15 & 16
21
273
19
249
- Retained income
6
81
6
78
100
1,285
100
1,316
* Includes Free State assets
State for taxes
$111m or 8%
Providers
of capital
$247m or 19%
Re-invested
in the group
$327m or 25%
Employees for
remuneration
$627m or 48%
Other $4m or 0%
2001 Distribution of wealth*
Employees for
remuneration
$443m or 35%
State for taxes $165m or 13%
Providers of capital
$310m or 24%
Re-invested
in the group
$354m or 27%
Other $13m or 1%
2002 Distribution of wealth
13
ANGLO GOLD LIMITED ANNUAL REPORT 2002
The factors which drove the gold price during 2002 had a particularly strong impact in the final quarter. These factors included US Dollar weakness, international political tension, equity market declines and a halt to the dismantling of producer hedging. This last factor had the effect of both lowering gold producer selling in the spot market, and introducing some buying in the market. During the final quarter of the year, the price was influenced most significantly by Dollar weakness and by escalating conflict over Iraq. Over the past year, the spot price has responded almost perfectly to the Dollar's fall against the Euro (see graph). The additional tension in the Middle East provided the lift to take gold up further. All of the factors that have been positive for gold in 2002 remain firmly in play, and there is good reason to expect higher gold prices in the year ahead.
Under the favourable price performance of gold, the physical market continued to show weakness throughout 2002. There has been a general decline in physical demand for gold in both the jewellery and the investment sectors, with exceptions in only a few countries. Compounding the effects of this lower demand, scrap sales and gold recycling have increased sharply in the face of higher gold prices. The negative impact of these factors in the physical market was mitigated to a degree by slightly lower new mine production, and by the reduction in supply occasioned by the run-down in gold producer hedging referred to above. As is the case in all periods of rising gold prices and gold price volatility, the physical market should revive once the price returns to a stable trading range for a period of time. However, with further gold price volatility expected in 2003, a resurgence of physical demand should not be expected immediately.
A critical factor in the strength of the gold market in 2002 has been the return of investor and speculator interest in the metal. This interest has not translated particularly into demand for physical gold, but can most certainly be seen in the derivative markets, and particularly in the futures and options positions on the New York Comex and, from time to time, on the Tokyo Comex. There is no doubt also a considerable over-the-counter derivative trade in gold, although this is not easily measured. The importance of this gold buying in the derivatives markets for the
gold price can be seen from the graph, showing gold trading positions on New York Comex from the beginning of 2000, and the US Dollar spot price of gold. Buying in the derivatives markets is directly influenced by the factors referred to above, and is directly responsible for moving the price of gold.
Review of the
gold market
T
14
Results for the year
• Headline earnings before unrealised
non-hedge derivatives increased by 29% to $368m or 166 US cps (2001: $286m or 133 US cps).
• Return on capital improved from
13% to 15%.
• Return on equity increased from
16% to 21%.
• Gold production was down 15% to
5.9Moz, mainly due to the sale of the Free State assets.
• Total cash costs declined by 10%
to $161/oz.
Dividends
A final dividend of R6.75 per share ($0.82 per share) was paid, bringing the total dividend for the year to R13.50 per share ($1.46 per share). This dividend represents a yield of 4.4% calculated on a share price of R305 on 30 January 2003. This level of dividend is consistent with AngloGold's established practice of paying out a high proportion of its earnings to shareholders, once it has provided for its organic growth objectives.
Gold production
Gold production was down 15% (1.04Moz) to 5.9Moz. This is mainly due to the South Africa region's sale of the Free State assets, Elandsrand and Deelkraal. If these are excluded, the group's production would have increased by 3% or 190,000oz.
The Free State contributed 1.2Moz and Elandsrand and Deelkraal contributed 35,000oz in the prior year.
With reference to the disposals mentioned above, South Africa's production is 27% lower than 2001 at 3.4Moz.
Production in the East and West Africa region increased by 25% or 217,000oz to 1.08Moz. The main contributors were at Morila (+169,000oz) due to a 74% increase in recovered grade to 11.96g/t; Yatela (+55,000oz) as 2002 was the first year of full production; and at Geita (+17,000oz) arising from increased tonnage throughput. Decreased production was recorded at Sadiola (-22,000oz) where there was lower grade and tonnage throughput.
The North America region's production decreased by 7% or 34,000oz to 462,000oz. Cripple Creek's production was 11,000oz up on the prior year due to the expansion of the crusher and absorption circuit. Jerritt Canyon's production was 45,000oz below that reported in the prior year, because of adverse weather conditions, and completion of the Cortez tolling agreement and lower recovery issues.
South America's production increased by 37,000oz to 478,000oz. This is mainly attributable to the additional 46.25% interest acquired in Cerro Vanguardia. If the additional interest were ignored, production would be 5% lower than the prior year due to production problems at Cerro Vanguardia arising from recurrent underground water in the pits causing mining of wet ore with a very high level of clay.
Australia's production decreased by 6,000oz to 502,000oz. This is mainly as a result of the closure of operations at Boddington and Tanami, which was partially offset by a 29% or 87,000oz increase in production at Sunrise Dam made possible by the mill upgrade.
Gold income
The average gold price received increased by 6% to $303/oz in 2002. See Review of Gold Market on page 13.
Gold income together with realised non-hedge derivative income declined by 10% or $205m during the 2002 financial year to $1,841m ($2,046m). This is in line with lower production, but partially offset by a higher price received. The current year's received price is $16/oz higher than that for the previous year at $303/oz and compares to an average spot price of $310/oz.
Cost of sales
Cost of sales, comprising total cash costs, retrenchment and rehabilitation costs, changes in gold inventories and amortisation of mining assets, went down from $1,519m in 2001 to $1,203m in 2002, a decrease of 21%, analysed as follows:
Total cash costs decreased from $1,255m in 2001 to $967m in 2002 (or $178/oz to $161/oz), following the reduction in gold produced from 6.983Moz in 2001 to 5.939Moz in 2002. Of the $17/oz reduction in cash costs year on year, $24/oz related to the weakening of the SA Rand against the US Dollar. Excluding the Free State operations in the prior year, total cash costs decreased by 5% from $170/oz to $161/oz.
•
While retrenchment costs were $22m in 2001 (with most of the costs being associated with the Free State) they decreased to $3m in 2002.
•
Rehabilitation and other non-cash costs decreased by $1m on the previous year whilst amortisation of mining assets increased by 11% to
Financial
review
A
ANGLO GOLD LIMITED ANNUAL REPORT 2002
15
$245m. South Africa's amortisation of mining assets reduced $15m to $61m, mainly due to the sale of the Free State operations and the devaluation of the SA Rand. The lower amortisation charge in South Africa was offset by the higher amortisation charges in East and West Africa due to increased levels of production, and in North America as a result of accelerated amortisation charges on the old crusher assets.
Inventory movement was a $9m charge in 2001 compared to a credit of $24m in 2002. The increase in inventory levels on the previous year is mainly due to the increase in gold in process in the North America region. This is as a result of the ongoing problems with extracting gold from the heap leach pad resulting in a build up of inventory.
Operating profit
Operating profit excluding unrealised non-hedge derivatives is 21% up on the previous year at $638m. This is mainly due to a 6% increase in the received Dollar gold price, and a weaker average Rand/Dollar exchange rate. Included in this operating profit is an amount of $80m relating to realised gains on non- hedge derivatives.
The main reason for the $111m increase in operating profit is the weaker Rand/Dollar exchange rate ($143m), offset by $24m caused by lower grades.
The operating margin for the AngloGold group was 35% for 2002 and 26% for 2001. The EBITDA margin was 43% in 2002 compared to 33% in 2001. These margins vary from operation to operation and are summarised on page 16.
Net profit
Net profit of $332m (2001: $245m) is arrived at after making, amongst others, the following adjustments to operating profit:
Corporate and other administration expenses increased by $3m on the previous year to $25m.
Market development costs amounted to $17m for the year of which some 80% was paid to the World Gold Council.
Total exploration expenditure was $51m (2001: $44m) of which $28m (2001: $26m) was expensed.
Interest received increased from $20m to $36m, mainly as a result of the improved gold price and improved cash position with the sale of shares acquired in the aborted bid of Normandy and the proceeds from the Free State sale.
Other net expenses amounted to $16m for the year and included the unwinding of the decommissioning obligation, foreign exchange losses on transactions other than sales, and post-retirement medical expenses relating to mines sold.
Finance costs decreased by $28m to $44m, due to lower interest rates and the rearrangement of the loan facility debt. The proceeds on the sale of the Normandy investment were utilised to repay debt.
An abnormal item relating to thesettlement of a legal claim in the amount of $10m $5m net of tax.
Goodwill amortised remained fairlyconstant at $28m compared to 2001.
A loss on disposal of the Free State
assets of $13m was recognised in 2002. During 2001, a loss of $4m was recognised in respect of the sale of assets at the Deelkraal and Elandsrand mines.
The taxation charge increased by $54m to $165m in 2002, owing mainly to an increase in earnings for the year. The effective tax rate is 32% compared to 30% in 2001.
The minorities share of earnings has increased to $15m compared to $8m in the prior year. This is due to the increase of minorities in Cerro Vanguardia from 3.75% to 7.5%.
Cash flow
OPERATING ACTIVITIES
Cash generated from operations was derived from profits on ordinary activities before taxation of $512m per the income statement, adjusted for changes in working capital and non-cash flow items. The most significant non-cash flow item was the amortisation of mining assets of $245m.
Finance costs of $40m; and
Mining and normal taxes of $131m.
INVESTING ACTIVITIES
Funds of $605m generated from operating activities were utilised to grow the group by investing in capital projects amounting to $271m. Major project expenditure in 2002 comprised:
Moab Khotsong $36m;
Mponeng $33m;
TauTona $11m;
Cripple Creek & Victor Expansion
$66m; and
Sunrise Dam Project $26m.
The funds generated from operating
activities were further adjusted by:
$164m which was received for the disposal of the Free State assets, of which $24m was paid for contractual obligations;
$34m which was paid for investments, the major portion of this being Normandy;
$158m which was the proceeds on the sale of the Normandy investment;
$97m which was the net cash consideration paid for the 46.25% additional interest in Cerro Vanguardia.
FINANCING ACTIVITIES
During the year, $585m was drawn and $120m was repaid on the three- year $600m syndicated loan facility. On the existing $400m syndicated loan facility, $175m was drawn.
Major loans repaid include $121m to Credit Agricole, $355m on the matured syndicated loan facility and $128m on the $400m syndicated loan facility. Other repayments comprise normal scheduled payments in terms of loan agreements.
FINANCIAL REVIEW
ANGLO GOLD LIMITED ANNUAL REPORT 2002
16
With effect from 1 January 2002, the Free State assets were sold to a joint venture
On 3 October 2002, the President of South Africa signed the Mineral and Petroleum Resources Development Act 2002. The provisions of this law will come into operation on dates to be specified by the President, who may stipulate different dates for different provisions. It is
FINANCIAL REVIEW
ANGLO GOLD LIMITED ANNUAL REPORT 2002
2002
Gold
Operating
Operating
income
profit*
margin
EBITDA
EBITDA
$m
$m
%
$m
margin %
South Africa
930
389
38.8
373
37.2
East and West Africa
329
129
39.2
190
57.8
South America
195
84
42.1
118
59.2
North America
152
3
1.9
59
38.1
Australia
155
33
21.3
55
35.5
Total
1,761
638
34.7
795
43.2
2001
Gold
Operating
Operating
income
profit*
margin
EBITDA
EBITDA
$m
$m
%
$m
margin %
South Africa
1,298
341
26.1
351
26.9
East and West Africa
250
87
34.8
134
53.6
South America
177
65
36.1
98
54.4
North America
161
16
9.9
58
36.0
Australia
155
18
12.2
38
25.7
Total
2,041
527
25.8
679
33.2
*
Operating profit excludes unrealised non-hedge derivatives.
17
FINANCIAL REVIEW
ANGLO GOLD LIMITED ANNUAL REPORT 2002
2002
2001
2000
1999
1998
Underground operations Area mined
- m
2
000
2,116
3,043
3,900
3,880
4,275
Metric tonnes milled
- 000
total
13,426
17,954
21,293
21,704
23,396
Yield
- g/t average
8.27
8.20
7.96
8.09
8.08
Production
- oz 000
total
3,569
4,734
5,451
5,643
5,821
Productivity g/employee
target
247
219
209
222
174
actual
238
214
193
210
184
Surface and dump reclamation Metric tonnes treated
- 000
38,366
50,355
50,289
54,354
57,511
Yield
- g/t
0.30
0.32
0.32
0.30
0.30
Production
- oz 000
365
514
510 520
547
Open-pit operations Metric tonnes mined
- 000
109,987
85,790
49,121 47,880
7,525
Stripping ratio
- t (mined-treated)/t treated
3.05
2.17
1.08 2.51
1.63
Metric tonnes treated
- 000
27,186
27,042
23,601 13,630
2,863
Yield
- g/t
2.29
2.00
1.69 1.72
2.54
Production
- oz 000
2,005
1,735
1,28 2 755
234
Total Production
- oz 000
5,939
6,983
7,24 3 6,918
6,602
- South Africa
- oz 000
3,412
4,670
5,418
5,746
6,368
- East and West Africa
- oz 000
1,085
868
366
262
234
- North America
- oz 000
462
496
496
485 -
- South America
- oz 000
478
441
439
425 -
- Australia
- oz 000
502
508
524 - -
Price received*
- $/oz sold
303
287
308
315
333
Total cash costs
- $/oz produced
161
178
213
213
225
Total production costs
- $/oz produced
203
213
245 244
259
Monthly average number of employees
53,097
70,380
84,036 86,120
93,316
LTIFR
8.86
10.55
11.58 13.91
14.52
Rand/US Dollar average exchange rate
10.48
8.62 6.78 6.11
5.53
Financial results $m Operating profit
650
517
468
505
469
Operating profit excluding unrealised non-hedge derivatives
638
527
468
505
469
Net profit
332
245
166 434
318
EBITDA
795
679
608 614
566
Headline earnings
376
281
254 325
277
Headline earnings before unrealised non-hedge derivatives
368
286
254 325
277
Capital expenditure
271
298
304 220
174
Financial ratios Capital employed
- $m
2,994
2,550
3,119 3,354
2,149
Return on capital
- %
15
13
10 15
13
Equity - $m
2,082
1,559
2,006 2,576
2,057
Return on equity
- %
21
16
11 16
12
Debt - $m
926
987
1,156 828
184
Cash - $m
413
191
195 493
254
Net debt (cash)
- $m
513
796
961 335
(70)
Net debt (cash) to capital employed
- %
17
31
31 10
(3)
Net debt (cash) to equity
- %
25
51
48 13
(3)
Interest cover
- times
18
9
9
12
23
Operating margin
- %
35
26
21
23
21
EBITDA margin
- %
43
33
28
28
25
Glossary of terms on page 138. * Including realised non-hedge derivatives
Group operating and financial results
The safety and health of employees remains a key area of focus for the company. Performance on the safety and health front was encouraging in some areas and disappointing in others.
18
Review
of
operations
A
ANGLO GOLD LIMITED ANNUAL REPORT 2002
AngloGold's Lost Time Injury Frequency Rate
(per million man hours)
(Clockwise from top left) Metallurgical test work pouring fused material from a gold fire assay in Kayes laboratory in Mali, East and West Africa region;
Severe weather conditions at Jerritt Canyon caused a slow start to the year in the North America region; This flotation tank at Ergo, South Africa, has the
capacity to treat 100,000t of slimes a day; Hydro-powered rockdrill operated by Ephraim Mabeia at Tau Lekoa mine, South Africa region; Stream sampling by
geologists in the Peru exploration division; Gold production rose significantly at Sunrise Dam, Australia region, during the year.
2002
2001
South Africa
9.98
11.58
East & West Africa
2.93
1.30
South America
4.21
8.16
North America
4.95
1.58
Australia
11.22
13.47
Group
8.86
10.55
0
2
4
6
8
10
12
14
16
1998 1999 2000 2001 2002
8.86
20
The massive fridge plant at Moab Khotsong in South Africa.
and developing a safety mindset. To assist in creating this safety mindset, an external consultant DuPont has completed an assessment of the company's operations and an in-house team has been established to tackle the implementation of this campaign. AngloGold's HIV/AIDS programme is dealt with on page 23.
Performance
Highlights for the year from an operational perspective include the sterling performance of the East and West Africa region, which increased attributable production by 25% to 1,085,000oz, at a total cash cost of $126/oz.
Further progress was made in AngloGold's drive for geographical and orebody diversity. Gold production from outside South Africa, principally from low-cost surface and shallow mines, rose to 42% of production, 39% of operating profit and 53% of EBITDA.
Overall, attributable production decreased to 5.94Moz, mainly as a result of the impact of the sale of the Free State assets. This was partially offset by an increase in production from the remaining operations of about 3%.
Good cost control was undermined to some extent by the strong performance of the SA Rand in the second half of the year. Nonetheless, total cash costs in Dollar terms decreased still further by 10% to $161/oz. As a result, operating profit increased by 21% to $638m.
Capital expenditure during the year amounted to $271m of which $95m was attributable to maintenance and $176m to expansion.
Outlook
Looking ahead, production is expected to remain unchanged in 2003 at 6Moz, while
total cash costs are expected to rise to $187/oz, largely due to the strengthening of the South African currency and the lower average grade being mined. The latter is directly related to the fact that lower grade areas have become profitable as a result of a rise in the gold price. Capital expenditure is forecast at $303m.
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
$/oz
0
50
100
150
200
250
1998 1999 2000 2001 2002
Total cash costs over time
Total cash costs have declined steadily
over the past five years. However, an
increase is expected in 2003 to $187/oz.
TOTAL CASH COSTS PER REGION ($/oz)
2002
2001 Variance %
South Africa
158
184
(14)
East and West Africa
126
129
(2)
South America
126
134
(6)
North America
222
211
5
Australia
193
194
(1)
Group
161
178
(10)
ATTRIBUTABLE PRODUCTION (000oz)
2002
2001 Variance %
South Africa
3,412
4,670
(27)
East and West Africa
1,085
868
25
South America
478
441
8
North America
462
496
(7)
Australia
502
508
(1)
Group
5,939
6,983
(15)
South Africa 58%
East & West Africa 18%
Australia 8%
South America 8%
North America 8%
Contribution to production (oz) by region
South Africa 47%
Australia 7%
South America 15%
North America 7%
East & West Africa 24%
Contribution to EBITDA by region
161/oz
22
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Safety and health
Tragically, 39 employees lost their lives in mine accidents during the year. This include 11 employees who lost their lives in three multiple fatal seismic accidents at Great Noligwa and Savuka. As a result, the FIFR rose to 0.34 in 2002 from 0.28 the previous year.
The primary cause of fatal accidents remains falls of ground, which caused 57% of fatal accidents during the year. A high- profile Fall of Ground Safety Campaign was launched during the first quarter of the year in an attempt to increase awareness associated with particularly non-seismic falls of ground, and this campaign has largely been successful. Transport-related accidents were the second biggest problem
* TauTona mine, despite operating at ultra-deep levels, has not had a rockfall-related accident since September 2001, and continues to post accident frequency rates similar to those of AngloGold's surface operations. TauTona
Ergo
West Wits TauTona Savuka Mponeng
Vaal River Tau Lekoa Kopanang Great Noligwa Moab Khotsong
South Africa
AngloGold's operations in South Africa
Key statistics
2002
2001
Tonnes treated (Mt) Underground
11.3
15.3
Surface (incl Ergo)
38.4
50.3
Average grade (g/t) Underground
8.40
8.20
158
184
R/kg
53,146
50,065
Number of employees*
Efficiencies g/TEC
223
206
m
2
/TEC
4.58
4.42
Capex $m
105
101
Rm
1,150
875
* Including contractors
Inundation
Slip and fall
Explosives
5%
2%
2%
Causes of fatal accidents - 2002
The primary cause of fatal accidents on the South African operations is falls of ground.
A major campaign to address this was initiated during the year.
23
REVIEW OF OPERATIONS
also won the South Africa region Safety Shield Competition for the best improvement in serious injury rates over the past five years.
* After the tragic multiple fatal accidents in May and June, Great Noligwa mine went on to achieve a million fatality- free shifts on 27 November 2002.
Occupational health
The primary concerns in respect of occupational health in the South African operations are noise-induced hearing loss (NIHL), occupational lung diseases (OLD) and tuberculosis (TB).
Occupational health services are provided to employees at two fully- equipped regional occupational health centres. These are staffed by occupational medical practitioners, professional nurses, audiologists and other support staff.
In addition, each mine has an occupational health nurse on site.
During the year, 52,742 occupational medical surveillance examinations (initial, periodical, transfer and exit) were performed. There were 1,087 new cases of NIHL in 2002. This translates into a rate of 26 per 1,000 employees, compared with 12 per 1,000 in 2001. Regarding OLD, 186 employees were diagnosed, reflecting a rate of 4 per 1,000 employees, the same rate as in 2001; 983 new cases of TB were treated in 2002, a rate of 23 per 1,000 employees, also the same rate as in 2001.
Stricter screening for NIHL, in preparation for a new compensation rule requiring base-lining of all employees, has meant an increase in the NIHL rates, which are now expected to fall off. No increase in liability is anticipated.
AngloGold continues to make advances in the control of underground dust. New and more accurate measuring methods have been introduced; better engineering practices are evident; a more standard approach to respiratory protective equipment has been implemented and employees detected as having very early OLD are moved to lower risk areas.
TB remains an area of focus in the sphere of occupational health. More effective detection methods are resulting in earlier diagnosis and treatment, which is limiting the onward transmission of the disease.
HIV is the major factor contributing to increased TB rates in South Africa. It is expected that the HIV Wellness Programme and introduction of anti- retroviral therapy (ART) by AngloGold (see HIV below) will have a positive impact on the TB problem and a project aimed at preventing transmission of TB, through mass prophylaxis, is planned for 2003.
HIV/AIDS
The prevention of HIV/AIDS infections
and the compassionate care of those
afflicted with the disease remains a
priority for the South Africa region.
AngloGold's core intervention comprises
four elements, namely:
Moab Khotsong
6.82
4.65
0.19
0.17
SAFETY STATISTICS
2002
2001
2000
1999
1998
FIFR
0.34
0.28
0.24
0.38
0.41
LTIFR
9.98
11.58
11.98
14.35
15.18
The South African operations performed
creditably in the year under review, despite a
slow start. If the Free State operations are
excluded from last year's production numbers,
production for the South Africa region
decreased by 1%.
ANGLO GOLD LIMITED ANNUAL REPORT 2002
24
The South African operations performed well for the year under review, despite a slow start at the beginning of the year and significant seismic events at Great Noligwa mine. Overall gold production declined by 27% to 3,412,000oz, a result of the once-off decrease of 1,232,000oz (26% on last year) attributable to the sale of the Free State assets. If the Free State operations are excluded from last year's production numbers, production decreased by 1% due to the drop in production at Ergo. Total cash costs decreased by 14% to $158/oz, and even in Rand terms were well controlled to a 6% increase to R53,146/kg. This was despite an inflation rate of approximately 12% during the year. Productivity, in terms of the two main indices used namely g/TEC and m /TEC improved by 8% to 223 and 4% to 4.58, respectively.
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
GREAT NOLIGWA
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
TauTona 25%
Kopanang 14%
25
26
REVIEW OF OPERATIONS
TAU TONA
TauTona continued with its strong performance during the year, with gold production rising by 3% to 643,000oz, or 19,997kg. Total cash costs decreased to $132/oz. In Rand terms, however, this reflected an increase of 5% to R44,465/kg.
Performance at Mponeng improved significantly during the year, with volumes mined increasing by 21% and yields rose to 8.63g/t. Although newly equipped raise lines had an impact on costs during the year, the
As anticipated, gold production decreased by 20% to 264,000oz, or 8,215kg, following the closure of the Daggafontein plant in December 2001. During the year, the operation was affected by higher- than-expected rainfall, environmental clean-up activities and power failures. The effects were offset by improved headgrades and increased metallurgical efficiency. Total cash costs decreased by 15% to $184/oz. In Rand terms, total cash costs increased by 5% to R61,810/kg.
Moab Khotsong
The largest project under development in the
South Africa region is the Moab Khotsong
mine, located in the Vaal River area.
Production is scheduled to commence in late
2003 , with full production expected in 2006.
The mine will add 4.5Moz to the region's
production to 2015, at an average cash
cost of $129/oz.
ANGLO GOLD LIMITED ANNUAL REPORT 2002
27
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
project team. The project scope includes rehabilitation, social aspects and other liabilities associated with the closure of the operation.
Growth
Three major growth projects are currently
in progress in South Africa at Mponeng,
TauTona and Moab Khotsong at a total
capital cost of approximately R5.6bn
($649.7m at current year's closing
exchange rate).
MPONENG SHAFT DEEPENING PROJECT
Good progress has been made during the year with the Mponeng Shaft Deepening Project. The project involves the development of ore reserves from the Ventersdorp Contact Reef (VCR) on 113, 116 and 120 levels at Mponeng mine (ranging from 3,172m to 3,372m below surface). The project will add some 2.8Moz to production and extend the LOM by five years to 2012. Total capex for the project is R1.3bn ($159.3m at current year's closing exchange rate) with some R318.7m remaining ($37.2m at current year's closing exchange rate). Average project cash costs over the LOM should be in the region of R55,200/kg ($180/oz at current year's closing exchange rate). In-circle development is in progress and will be completed by February 2003.
Access development on 113 level has been completed and permanent equipping began in January 2003. At 116 and 120 levels, access development is scheduled for completion in May 2003.
TauTona
VCR shaft pillar and 66 level
0.3Moz
2005
Tau Lekoa
Above 900 level
0.2Moz
2006
Great Noligwa
Great Noligwa mine contributed 26% to the South Africa region's production. This was despite
several major seismic events at the mine during the year. The underground locomotive seen here is
known as "Big Momma". Its introduction is part of the mine's Hypermine project.
28
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Since the South Africa region employs by far the most people, and has the largest number of operations, its community and environmental impact is greater here than anywhere else. The aim of the South Africa region is to create a balance between the impact on the natural and social environments in which it operates while at the same time ensuring that it delivers significant and lasting benefits to employees, their communities and other stakeholders, in partnership with government, international agencies, labour, health and non-governmental organisations. As a result of historical and current socio- economic imperatives, the role played by the company in social issues is significant.
An amended Environmental Management Programme Report for the West Wits and Vaal River operations was submitted to the Department of Minerals and Energy in November 2002. It is anticipated that feedback will be received on this early in 2003.
(From left to right) A pre-schooler enjoying the outside play area at the Shiloh Marabian Mission Station School in Whittlesea (a Khululeka project); Noncedile Mozondi, one of the Mabhongo villagers who was given chickens as a part of the Masikhanyise sustainable development project. Coleth du Plessis and her pupils in the new cookery centre at the North West Secondary School for the deaf in Leeudoringstad. All these projects were supported by the AngloGold Fund.
REVIEW OF OPERATIONS
29
ANGLO GOLD LIMITED ANNUAL REPORT 2002
* Klerksdorp Methodist Primary School is one of the few English-medium primary schools in one of AngloGold's key operational areas. The school's intake has grown exponentially over the past few years, to the point where new learners had to be turned away due to the lack of space. AngloGold's donation of $118,000 will enable a block of five classrooms to be added to the complex.
* The Boyden Observatory is home to the second largest optical telescope in Africa. The observatory, part of the University of the Free State's Science Block, recently initiated a project to upgrade its facilities to make them more relevant to the school curriculum and accessible to previously disadvantaged communities in the area. The long-term aim is to foster greater interest in the study of science, engineering and technology.
(From left to right) A Grade 6 pupil doing his homework in the aftercare centre at the Methodist Primary School in Klerksdorp; Ayanda Matha a pre-grade pupil enjoying the playground equipment that AngloGold sponsored for the Winterberg School Trust, Tarkastad; Elisabeth Ganakgomo preparing a quilted bedspread that will be sold to raise funds for the Mohau AIDS centre.
* Goldfields Hospice in the Free State has received a grant of $15,000. This valuable facility provides extensive community- based homecare for terminally ill patients in the Welkom area in the Free State.
* Siphumezulwazi Secondary School in Alice in the Eastern Cape has been awarded grant from the AngloGold Fund for the construction of five classrooms, a store room, an office and ablution facilities.
* The National Association of Childcare Workers in the
Eastern Cape was awarded $27,500 for the Isibindi project in Cala, in the Eastern Cape. The project provides accredited training, support and development for child and youth care workers and is aimed at assisting children and youths who have been placed at risk as a result of abuse, HIV/AIDS or criminal involvement.
* Khululeka Community Education Development Centre in Queenstown, Eastern Cape, is another project that was supported during the year. A $25,000 grant to this leading early childhood development centre will enable a comprehensive training programme to be developed to empower other early childhood development practitioners with skills, resources and values to provide quality education and care for young children. The materials developed by Khululeka are already used by many other non-governmental organisations (NGOs) who do not have the resources or infrastructure to develop their own materials.
* The African Medical Mission in the Eastern Cape received
a grant of $27,000. The hospital which is situated in the town of Bedford, caters for a third of the people in the province many of whom live in rural areas and cannot afford alternative medical facilities and care.
* Carletonville Technical College was awarded some $23,000 to purchase computers for an engineering laboratory. The college is one of only six technical colleges in the country offering mining-related subjects and the only facility offering surface and hard-rock courses. Improved facilities will better equip locals with the knowledge, resources and skills to be employed by mines in the surrounding areas.
* Another project which received support is the St Bernard's
Hospice in the Eastern Cape. One of the best managed hospices in the region, St Bernard's provides a safe haven for terminally ill patients. A grant of $25,000 has assisted this organisation in improving and extending its homecare programme and to extend specialist care to patients, many of whom suffer from HIV/AIDS.
* The AngloGold Fund also awarded a grant of $20,000 to
the Triest Training Centre in North West Province. The centre provides care, rehabilitation and the integration of intellectually handicapped people into mainstream society.
The Morifi Community Secondary School was opened in September 2002. The school, granted R2.5m from the AngloGold Fund and situated in rural Lesotho not far from Mohale's Hoek, is the first in the area to cater for pupils in the post-primary phase. It was built following extensive consultation and planning with both the community and the Lesotho Ministry of Education. As almost a fifth of employees are from Lesotho, this is in line with the strategy to contribute to those communities from where AngloGold's employees come. The first intake of 160 pupils has been enrolled and there are five teachers on the staff. The number of pupils is expected to increase to 475 within three years.
REVIEW OF OPERATIONS
30
(From left to right) Songo Ndungane and Popama Mokopane, Grade 2
pupils, taking a break from a literacy class, Ginsberg Primary,
King William's Town.
32
REVIEW OF OPERATIONS
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Safety and health
Safety has been an issue of concern in the East and West Africa region during the year, with 45 lost time injuries. One fatal accident occurred at Morila and three fatal accidents at Geita. The main contributing factors were identified and action plans were implemented to address the deficiencies. The LTIFR and the FIFR for the region were 2.93 and 0.26 respectively.
During the year, Geita maintained its NOSA 4-star rating, while Navachab retained its NOSA 5-star rating.
Malaria
With the ever-present threat of malaria at most of the African operations, prevention and treatment programmes are running effectively at the Malian and Tanzanian operations The focus is on education, malaria vector control, the issuing of mosquito nets and early detection and treatment.
HIV/AIDS
HIV/AIDS programmes have been implemented in the region with the
Mali
Tanzania
Namibia
Geita
Sadiola
Yatela
Morila
Navachab
WHO OWNS AND MANAGES THE OPERATIONS
Key statistics
2002
2001
Tonnes treated (Mt) (attributable)
8.0
7.3
Average grade (g/t)
4.22
3.71
Gold production (000 oz) (attributable)
1,085
868
Total cash cost $/oz
126
129
Number of employees* 2,275
1,600
Efficiencies (g/TEC)
1,855
1,884
Capex ($m) (attributable)
27
34
* Including contractors
East and West Africa
AngloGold's operations in East and West Africa
The East and West Africa region (formerly known as the Africa region) comprises five operations,
located in three African countries other than South Africa. These are the Yatela, Sadiola and Morila
mines in Mali, the Navachab mine in Namibia and the Geita mine in Tanzania.
Navachab
3.05
2.98
0.00
0.00
Yatela
2.07
2.52
0.00
0.00
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REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
primary focus on prevention through education and awareness. At all operations, education programmes have been conducted in the local communities and throughout the workforce. Peer educators have been identified and have received professional training. Partnerships have been formed with NGOs and other stakeholders in the local communities. Awareness programmes and condom distribution initiatives are ongoing.
Performance and outlook
Overall, the East and West Africa region
delivered an excellent performance for
the year and produced over a million
attributable ounces for the first time,
largely owing to the exceptional high-
grade ore at Morila. Attributable
production increased by 25% to
1,085,000oz, while total cash costs
decreased by 2% to $126/oz. Operating
profit, excluding unrealised non-hedge
derivatives, increased to $129m.
MORILA
Gold production at Morila increased by 67% to 421,000oz, largely as a result of the interception of exceptionally high-grade zones of ore during July to October. The average recovered grade for the year rose by 74% to 11.96g/t. As a result, total cash costs for the year improved by 28% to $74/oz and operating profit, excluding unrealised non-hedge derivatives, rose by 190% to $70m.
Attributable production at Morila should decrease by 19% to 343,000oz for 2003, while total cash costs will be $93/oz with the return to average mine grades. Drilling to identify other possible high- grade zones is underway. Capital expenditure of $4m is anticipated in 2003.
GEITA
Geita experienced another good year. Production rose by 6% to 290,000oz, despite a 2% decline in the average grade for the year to 3.62g/t. Total cash costs increased by 19% to $175/oz, as a result of increased stripping requirements, increased mining from the Kukuluma pit, and greater distances to the Geita plant. Operating profit, excluding unrealised non-hedge derivatives, fell by 20% to $20m.
During the second quarter, Geita successfully concluded its 90-day project completion testing, as required by loan covenants, resulting in the release of the AngloGold loan guarantees.
Approval was granted for the first phase of the Geita expansion project during the first quarter of the year. This followed encouraging results from exploration drilling in the Nyankanga pit, which increased the total remaining ore reserve to 33.5Mt. To realise the full potential of this increased reserve, plant throughput is being raised from 4.5Mtpa to 6Mtpa in two phases over the next two years. By year-end, Phase 1 of this project
increasing throughput to 5.6Mtpa had been completed and commissioned.
During 2003, attributable production should increase by 17% to 339,000oz. Total cash costs should increase by 1% to $176/oz. Capital expenditure of $12m is planned in 2003.
SADIOLA
Tonnage throughput at Sadiola was adversely affected by mineral sizer downtime in the first quarter, the low availability of high-grade oxide ore during the year and problems with the treatment of higher-grade soft sulphide ore. This resulted in a 5% decrease in the average recovered grade for the year to 2.96g/t. Consequently, gold production of 182,000oz was 10% lower than the previous year. Total cash costs increased by 25% to $163/oz as a result of the lower production and treatment of sulphide ores. Operating profit, excluding unrealised non-hedge derivatives, decreased by 42% to $12m.
The plant conversion project to improve gold recovery from the treatment of soft sulphide ore was completed on schedule by the end of February 2002. High cyanide values in the final residue prevented the treatment of soft sulphide ore, which required high cyanide addition to maintain acceptable recoveries. A cyanide destruction plant was designed and commissioned in the third quarter and
Expansion at Geita
The first phase of the Geita gold plant
expansion was approved during the first
quarter following encouraging results from
exploration in the Nyankanga pit, which
increased the total remaining reserve to
33.5Mt. Plant throughput is being increased
from 4.5Mtpa to 6Mtpa in two phases.
Phase 1, which was completed in
December 2002, involved the installation of
secondary crushers and modification to the
ball mill to cater for the increased throughput,
raising the treatment rate to 5.6Mtpa at a
capital cost of $3m.
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REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
As a result of the successful brownfields drilling programme at Geita during
AngloGold's aim of ensuring sustainable development is particularly pertinent in Africa where mining operations are frequently located in inaccessible areas, largely untouched by industry and economic development. Sensible mining practices, with the full involvement of local communities and governments, can ensure that long-term benefits accrue to the regions, even after mining has been completed.
35
AngloGold's philosophy of ensuring
sustainable development is particularly
pertinent in Africa where mining operations
are frequently located in inaccessible areas,
largely untouched by industry and economic
development. Sensible mining practices,
with the full involvement of local
government and communities such
as here at Sadiola in Mali can ensure that
long-term benefits accrue to the region,
even after mining has been completed.
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
36
Brazil
Argentina
Serra Grande
Cerro Vanguardia
Morro Velho
AngloGold's operations
in South America
The South America region comprises three
operations, Morro Velho and Serra Grande
(50%) in Brazil and Cerro Vanguardia
(92.5% as of July 2002) in Argentina.
Key statistics
2002
2001
Tonnes treated (Mt) (attributable)
1.9
1.7
Average grade (g/t)
7.8
7.8
Gold production (oz) (attributable)
478,000
441,000
Total cash cost ($/oz)
126
134
Number of employees *
2,660
2,300
Efficiencies (g/TEC)
684
611
Capex ($m) (attributable)
24
20
* Excludes contractors for the Cuiab
Expansion and contractors for the implementation phase of Crrego do Stio mine
South America
Safety and health
Safety performance in the region was good, with the overall LTIFR - at 4.21 - below the Ontario benchmark of 6.5. Regrettably, a fatal accident occurred at
Cerro Vanguardia on 17 July.
Following a complete review of risk management procedures in November 2002, Cerro Vanguardia was re-audited and maintained a NOSA 5-star rating and ISO14001 Certification.
Serra Grande was audited during the first quarter and gained a 4-star rating. At the end of November, the mine was re- audited and achieved a NOSA 5-star rating the first underground mine in the world to achieve this distinction. The mine was awarded the inaugural Dick Fisher Safety Award, for the best performance across AngloGold's
operations, based on year-on-year safety improvements.
Morro Velho was also audited in the first quarter and was awarded a NOSA 3-star rating. A re-audit will take place in the first quarter of 2003.
Performance and outlook
Attributable production in the South America region increased to 478,000oz, principally as a result of the acquisition of
an additional 46.25% stake in Cerro Vanguardia in July 2002. Total cash costs decreased by 6% to $126/oz as a result of improved cost management, higher by- product credits and the effects of the devaluation of the Real and Peso. Attributable operating profit, excluding unrealised non-hedge derivatives, rose by 26% to $68m, primarily as more gold was sold at a higher gold price with lower cash costs.
MORRO VELHO
Production declined marginally to 205,000oz because of lower tonnages treated. This was exacerbated by rock mechanic problems experienced at Cuiab mine in the first quarter, which have since been resolved. Total cash costs increased by 3% to $131/oz. Operating profit, excluding unrealised non-hedge derivatives, was kept stable at $29m. Looking to 2003, production is expected
ANGLOGOLD'S OPERATIONS IN SOUTH AMERICA
Operation
Country
Partners
Stake
Management
Morro
Brazil
-
100%
AngloGold
Velho Serra
Brazil
AngloGold
50%
AngloGold
Grande
TVX Gold inc
50%
Cerro
Argentina
AngloGold
92.5%
AngloGold
Vanguardia
Formicruz, Santa
7.5%
Cruz Province
SAFETY PERFORMANCE
LTIFR
FIFR
2002
2001
2002
2001
Morro Velho
5.73
9.07
0.00
0.58
Serra Grande
0.70
6.42
0.00
0.00
Cerro Vanguardia
3.72
7.54
0.93
0.00
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
ANGLO GOLD LIMITED ANNUAL REPORT 2002
to increase to 218,000oz, at a total cash cost of $106/oz. Capital expenditure for the year amounted to $17m and will increase to $28m during 2003.
SERRA GRANDE
Attributable production decreased by 3% to 94,000oz as a result of a 3% fall in grade owing to a depletion of the sulphide orebodies. Total cash costs decreased by 7% to $100/oz mainly due to the devaluation of the Real. Attributable operating profit, excluding unrealised non-hedge derivatives, increased by 1% to $17m.
Production is expected to decrease to 90,000oz in 2003, at a total cash cost of $90/oz. Capital expenditure for the year amounted to $3m, and will increase to $4m during 2003.
CERRO VANGUARDIA
Attributable gold production rose by 32% to 179,000oz principally as a result of the acquisition of an additional 46.25% stake from Prez Companc in July 2002. Excluding the additional production arising from the acquisition, production declined by 11% as a result of water entering the pits and combining with clay in the ore feed to the plant, causing production delays in the third quarter, which are still being addressed.
Total cash costs decreased by 22% to $104/oz as a result of better cost management and the Peso devaluation,
while attributable operating profit, excluding unrealised non-hedge derivatives, increased 85% to $27m, as a result of AngloGold's additional interests in Cerro Vanguardia, lower cash costs and the higher gold price received.
In 2003, production should rise to 246,000oz, at a total cash cost of $110/oz. Capital expenditure for the year amounted to $2m, and will increase to $6m during 2003.
Growth
The pre-feasibility study for the Cuiab Expansion Project was completed in 2002. The project envisages expanding production from 2,300tpd to 4,000tpd, yielding an additional 180,000oz/year of production at an estimated capital cost of some $93m. The feasibility study for the project will be completed during 2003 and, should approval be received, is scheduled for implementation in September 2004. Full production capacity would be reached in 2006.
Pre-feasibility studies to expand Cerro Vanguardia's ore treatment plant throughput to 1.2Mtpa and underground mining to produce 300,000tpa were both started in 2002. The increase in production is forecast at 75,000oz per year at an estimated capital expenditure of $13m. Implementation of these projects will be carried out from August 2003 to August 2004 and full production is expected in 2005.
The pre-feasibility study of the Lamego Project, which envisages the exploitation of 6.3Mt of resources at 5.96g/t, is due to start in 2003. Production is forecast to be 45,000oz per year for 10 years, with capital expenditure of $14m.
Opening of the access ramp to confirm resources of 600,000t at 10.78g/t of sulphide ore at Crrego do Stio began in 2002. The pre-feasibility study to treat the sulphide ore will start in 2003 at an estimated capital expenditure of $13m. The project will produce 55,000oz/year.
Exploration work continues at Serra Grande, with the aim of increasing reserves. During 2002, aerial geophysical work was undertaken and studies to verify geophysical anomalies were conducted. During 2003, it is expected that the investigation of such anomalies is expected to intensify.
Sustainable development
Environmental and social issues continue
to receive attention.
Ongoing environmental work at Morro Velho includes a stepped-up waste collection and recycling campaign during the year, significantly reducing the amount of waste generated by the company. This programme has been bolstered by an extensive communications network to instil further awareness of the campaign.
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REVIEW OF OPERATIONS
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In Raposos, Morro Velho has revitalised a dressmakers' cooperative by providing both financial and administrative support. Raposos, a mining town, was founded more than 300 years ago around one of the Morro Velho operations which has since closed.
Various donations amounting to $1.2m were made by the company to a number of projects. As an example of working in partnership with local municipalities, communities and other institutions, Morro Velho recently contributed towards the establishment of the Reference Centre for Pneumology. The Centre provides free services for the diagnosis and treatment of silicosis and associated diseases. The Centre has its own team of specialist physicians including ancillary services such as social work, physical therapy and pharmacies.
A project that has been dubbed "the second gold yield" will see the valuable real estate owned by Morro Velho in and around Nova Lima being used to provide much-needed green areas as a very important backdrop to the growing urban
landscape. Discussions are being held with key authorities in the region to ensure appropriate best practice use into the future. Also in the Nova Lima area, an educational campaign has been developed to inform communities about safe water usage.
To increase awareness of such green issues, the Harry Oppenheimer Centre for Environmental Education continued with its efforts during the year, while at the same time providing a recreational centre. The Centre had some 9,000 visitors during the year and about 600 company employees participated in courses and workshops looking at environmental programmes and technology implemented by the company.
Another environmental project, established by Serra Grande 18 months ago, the Ecological Preservation Centre, received visits from more than 400 people from the community of Crixs during the year. Students and teachers, as well as other community leaders, participated in the environmental awareness courses developed by the Centre.
A survey of the small community of Rio Acima, home to the Engenho d'gua mine, near Morro Velho, indicated that, although most community members were positive about the development, some aspects of concern were raised such as dust and traffic control. This was then addressed by the company by watering the roads and further training of operators.
The Crrego do Stio mine, located in Santa Brbara, was granted a renewal of its operating permit in 2002, which is now valid until July 2007. Good progress was made with environmental rehabilitation on the mine with about 163 hectares having been replanted up to December 2002.
An agreement was reached with the National University of Southern Patagonia for the monitoring of the flora, fauna and soil of the region in which the Cerro Vanguardia mine is situated. The aim is to ensure the preservation of animal and plant species, in addition to maintaining water and soil quality.
Cerro Vanguardia received both the
ISO14001 and NOSA 5-star status,
becoming the only mine in the
world to have achieved these two
accreditations simultaneously.
39
Safety and health
Safety performance continued at the
exceptionally high levels that have
become the norm at the North American
operations. The overall LTIFR was
4.95, which compares favourably with the
Ontario benchmark. Jerritt Canyon's
Smith mine was once again recognised by
the Nevada Mining Association as having
the lowest reportable injury rates for
calendar 2001, while the Murray mine
achieved one million man-hours without
a lost time injury.
CC&V was recognised by the Colorado Mining Association for achieving over 728,000 contractor man- hours without a lost time injury during the recent project expansion. CC&V's Safety Supervisor was also recognised by the Colorado Mining Association for his active involvement in this achievement.
Performance and outlook
The year started with some difficulties at
the North American operations as severe
weather conditions affected Jerritt
Canyon, and CC&V experienced ongoing
technical problems associated with its
valley leach facility. Performance had
improved by year-end, however,
particularly as major elements of the
CC&V expansion project were completed
on time and below budget. Production
for the year decreased by 7% to 462,000oz, while cash costs rose by 5% to $222/oz. Operating profit, excluding unrealised non-hedge derivatives, decreased by 84% to $3m as a result of these production issues and higher non- cash charges at CC&V.
JERRITT CANYON
A reorganisation of labour in the underground mines resulted in reduced productivity in the first quarter, but the resultant improvements were felt from the second quarter onwards. Attributable production decreased by 16% to 237,000oz, primarily due to lower first quarter mill tonnages, lower grades mined, and completion of the Cortez tolling agreement.
Total cash costs increased by 12% to $249/oz, while operating profit excluding unrealised non- hedge derivatives, decreased to a loss of $3m.
On 27 February 2003, it was announced that AngloGold had entered into a purchase and sale agreement with Queenstake Resources USA Inc on its interest in the Jerritt Canyon Joint Venture. In terms of the agreement, Queenstake will pay the Jerritt Canyon Joint Venture $8m on closing, $6m in deferred payments and additional royalty payments. Queenstake will accept full closure and reclamation and other liabilities. The transaction is expected to close no later than 31 March 2003.
CC&V Production at CC&V increased by 5% to 225,000oz. Although gold production was negatively affected by technical problems associated with the leach system pH, higher leach solution volumes were processed during the latter part of the year. These factors, combined with the near completion of the bulk of the $195m
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
USA
Jerritt
Canyon
CC&V
Key statistics
2002
2001
Tonnes treated (Mt) (attributable)
13.3
12.2
Average grade (g/t)
1.08
1.27
Gold production (oz) (attributable)
462,000
496,000
Total cash cost ($/oz)
222
211
Number of employees*
910
850
Efficiencies (g/TEC)
1,979
2,273
Capex ($m) (attributable)
74
93
* Including contractors
North America
AngloGold's operations
in North America
The North America region comprises the
Jerritt Canyon Joint Venture (70%) and the
Cripple Creek & Victor Gold Mining
Company (CC&V) (67% interest, with a
100% interest in gold produced).
SAFETY PERFORMANCE
LTIFR
2002
2001
Jerritt Canyon
5.74
1.17
CC&V
4.36
1.91
expansion in the third quarter, served to enhance operational efficiencies. The expansion project has increased the average annual gold production by 40% and extended the LOM from 2008 to at least 2013, thereby yielding an additional 2.8Moz. Current indications are that the average LOM cash costs will reduce from $227/oz to $176/oz. The new crushing facility was commissioned in July 2002, while additional leach pad and solution handling equipment were brought into production in September and December 2002, respectively.
Total cash costs remained at $187/oz
as higher reagent costs were offset by continued cost-cutting efforts. Mined tonnage and metal production improved towards the latter part of the year as the full benefit of the expansion project was realised.
Operating profit, excluding
unrealised non-hedge derivatives, decreased by 38% to $6m, owing to accelerated depreciation charges on the old crusher assets and higher amortisation charges relating to increased production. For 2003, production is likely to rise to 414,000oz at a total cash cost of $179/oz. Capital expenditure amounted to $66m in 2002, and is expected to be in the region of $25m in 2003.
Growth
Following the completion of the CC&V expansion project in 2002, extensive brownfields drilling is being conducted to further optimise surface mine plans, as well as to assess the potential for future underground operations.
Sustainable development
AngloGold North America endeavours to make a positive contribution to the communities in which the company operates. Projects with potential social, economic or environmental benefits are identified, nominated, evaluated and recommended to management for support.
Jerritt Canyon spearheaded the development of a voluntary mercury reduction programme with other mining companies, as well as state and federal government agencies. The aim is to reduce mercury air emissions between 2003 and 2005. Jerritt Canyon was a charter member and has implemented controls and other actions to exceed programme requirements.
and site rehabilitation of facilities beyond the requirements of the approved reclamation plan, were undertaken at Jerritt Canyon in 2002.
of Colorado for this worthwhile project that will benefit the citizens of Teller County for many years into the future.
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REVIEW OF OPERATIONS
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Expansion at Cripple Creek
& Victor
The expansion project, completed in 2002
without a single lost time injury, has increased
gold production capacity by 40% and extended
the LOM to 2013.
This 1,218ft long bridge, built to
accommodate the expanded CC&V leach pad,
spans a 250ft drop and cost $18m to build.
The bridge is a co-operative effort between
CC&V and the Colorado Department
of Transportation.
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REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Union Reefs
Sunrise Dam
Key statistics
2002
2001
Tonnes treated (Mt) (attributable)
6.1
8.0
Average grade (g/t)
2.56
1.97
Gold production (oz) (attributable)
502,000
508,000
Total cash cost $/oz
193
194
A$/oz
354
375
Number of employees*
600
700
Efficiencies (g/TEC)
2,437
1,952
Capex (attributable) $m
31
42
A$m
57
82
* Including contractors
Australia
AngloGold's operations in Australia
The Australia region comprises two operations: Sunrise Dam in Western Australia and Union Reefs
in the Northern Territory. Two further operations, Boddington and Tanami, were closed at the end of 2001, with only the residual plant clean-up at Boddington contributing 2,000oz during the year.
Boddington is currently on a care-and-maintenance programme, pending a decision to proceed with the Boddington Expansion Project. The Tanami plant has been leased for third party ore processing.
SAFETY PERFORMANCE*
LTIFR
2002
2001
Sunrise Dam
11.0
11.56
Union Reefs
0.0
5.08
* Based on South African benchmark
definitions
Safety and health
The Australia region (including Union
Reefs, Sunrise Dam and Boddington)
recorded an LTIFR of 11.22 for the year,
down some 17% on the previous year,
combined with a 38% decrease in all
injuries. The SafeGold initiative,
launched by Bobby Godsell at the
Australian operations in late 2001,
contributed to the improved safety
performance. Further safety initiatives
will be introduced in 2003.
Performance and outlook
Overall, production in the Australia
region decreased only marginally (by 1%)
to 502,000oz despite the closure of
Tanami and Boddington in late 2001.
Excellent results were achieved from the
remaining operations, particularly at
Sunrise Dam, where production
increased by 30%. In US Dollar terms,
total cash costs decreased by 1% to
$193/oz, or A$354/oz, a decline of 6%. This was a result of an ongoing focus on cost reduction and the impact of the expansion at Sunrise Dam. Operating profit, excluding unrealised non-hedge derivatives, increased by 83% to $33m (A$60m).
SUNRISE DAM
Gold production at Sunrise Dam increased significantly by 30% to 382,000oz as plant throughput rose by 41% to an annual rate of 3.4Mtpa following the capital expansions under- taken the previous year. Total cash costs increased by 15% to $177/oz or by 9% to A$323/oz. After completion of a major cutback at the end of 2001, mining in the new MegaPit reached full capacity in the first half of 2002. A smaller cutback, in the Watu section of the pit, was approved during the year, giving access to additional ore that had been identified for ongoing drilling. Operating profit, excluding unrealised non-hedge derivatives, rose by 57% to $33m (A$61m). Production should remain unchanged at 382,000oz in 2003 at
an expected total cash cost of $192/oz (A$326/oz). Capital expenditure was $26m (A$47m) for 2002, and should be of the order of $14m (A$23m) in 2003.
UNION REEFS
Gold production at Union Reefs increased by 4% to 118,000oz, despite disruptions to mining in the main Crosscourse Pit during the wet season at the beginning of the year, and an increased focus on mining smaller, satellite resources. Furthermore, total cash costs fell by 3% to $224/oz or by 8% to A$411/oz, as a result of higher production and tight cost control. As a result, operating profit, excluding unrealised non-hedge derivatives, increased to $3m (A$6m). The mine remains in closure mode, with operations expected to cease in the second half of 2003.
Growth
Very encouraging exploration results were
achieved at Sunrise Dam during the year. A decision to proceed with the
Boddington Expansion Project is expected
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REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
by the second half of 2003. AngloGold owns 33.33% of the Boddington Gold Mine, along with Newmont (44.45%) and Newcrest (22.22%). A feasibility study completed in 2000 was based on an operation with a throughput of 25Mtpa, producing an average of 600,000oz of gold and 22,500t of copper per year over a mine life of 15 years. Further work was undertaken by the respective JV partners in the past year to further test the feasibility study, better understand the project risk and identify opportunities for enhancing returns. This work is likely to continue into the second quarter of 2003.
During 2002, Worlsey Alumina - the previous manager of the project - was
replaced by the Boddington Gold Mining Management Company, which is owned by the JV partners in proportion to their interests in the project. Environmental approvals associated with the expansion were received in June 2002 and will remain valid for a period of five years.
Sustainable development
Environmental management and
compliance, as well as the promotion of
social development in the regions in which
the company operates, continued as a
matter of priority during the year.
AngloGold Australia improved its environ- mental performance, reducing the number of Category 3 incidents
during the year to two compared with eight incidents in 2001. A detailed closure plan for Union Reefs, addressing environmental, stakeholder and community issues, was approved by the Northern Territory Government.
Encouraging exploration results were achieved
at Sunrise Dam, where gold production has
already increased significantly during the year
under review.
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
44
Attributable
Average
tonnes
grade
treated
recovered
(Mt)
(g/t)
2002
2001
2002
2001
Operation SOUTH AFRICA
Ergo
32.8
41.3
0.25
0.25
Great Noligwa
2.5
2.5
11.02
12.34
Kopanang
2.2
2.1
7.23
7.4
Moab Khotsong * - - - -
Mponeng
1.7
1.5
8.63
7.71
Savuka
1.0
0.9
7.07
7.97
Tau Lekoa
2.2
2.0
4.45
4.42
TauTona
1.7
1.6
11.66
11.94
EAST AND WEST AFRICA
Geita (50%)
2.5
2.3
3.62
3.7
Morila (40%)
1.1
1.1
11.96
6.87
Navachab
1.4
1.3
1.93
2.04
Sadiola (38%)
1.9
2.0
2.96
3.13
Yatela (40%)
1.1
0.5
2.95
3.33
NORTH AMERICA
Cripple Creek & Victor Joint Venture
12.4
11.3
0.57
0.59
Jerritt Canyon Joint Venture (70%)
0.9
0.9
7.91
9.41
SOUTH AMERICA
Cerro Vanguardia (92.5%)
0.6
0.4
9.49
10.51
Morro Velho
1.0
1.0
6.71
6.63
Serra Grande (50%)
0.4
0.4
7.84
8.08
AUSTRALIA
Boddington (33.33%) -
2.6
-
0.92
Sunrise Dam
3.4
2.4
3.49
3.81
Union Reefs
2.7
2.6
1.36
1.36
*
Moab Khotsong is a new mine in its development phase. The mine is expected to commence production in 2003.
Operating profit excluding unrealised non-hedge derivatives.
Summary of operations
REVIEW OF OPERATIONS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
45
Attributable
Attributable
gold
Total cash
operating
Attributable
production
costs
profit
EBITDA
(000oz)
($/oz)
($m)
($m)
2002
2001
2002
2001
2002
2001
2002
2001
264
332
184
215
20
16
22
18
880
1,004
124
122
141
147
149
154
511
494
165
178
56
42
63
49
- - - - - - - -
466
366
178
223
30
-
54
18
236
240
245
248
9
4
12
6
311
286
192
203
23
10
32
16
643
622
132
154
98
69
104
75
290
273
175
147
20
25
33
37
421
252
74
103
70
25
99
43
85
87
147
164
12
9
13
10
182
204
163
131
12
21
25
34
107
52
175
149
10
5
15
7
225
214
187
187
6
10
43
32
237
282
249
223
(3)
8
19
26
179
136
104
133
27
14
44
26
205
209
131
127
29
28
41
40
94
96
100
107
17
13
22
19
2
78
-
190
-
5
-
7
382
295
177
153
33
21
51
33
118
114
224
230
3
1
6
5
Independently of its support for the WGC, the company is active in a number of other marketing projects in support of gold, and AngloGold remains the only gold company in the world that has committed this level of resources to marketing the metal it produces.
Among existing downstream initiatives, the company continues as a partner in GoldAvenue, an Internet collaboration between AngloGold, JP Morgan Chase and Pamp MKS of Geneva. During 2002, GoldAvenue published two new gold jewellery catalogues focused on uniquely designed, high-value gold jewellery aimed at the US market. Both sales and market penetration improved, with further growth anticipated during the year ahead. This business is being developed in association with Vivre, a luxury goods catalogue business operation in which GoldAvenue has taken an equity interest. AngloGold has provided additional support to this venture through product development, sourcing and product selection.
AngloGold holds a 25% stake in OroAfrica, the largest manufacturer of gold jewellery in South Africa, as an investment in the downstream gold value chain. AngloGold and OroAfrica have co- operated in a number of projects including OroAfrica's development and launch of an African gold jewellery brand. An important strategic step has been the establishment of a Jewellery Design Centre at OroAfrica at a cost of $250,000. The purpose of the centre is to generate new gold jewellery designs, and to improve product standards through technology, design and innovation.
In the area of design innovation, AngloGold's current Riches of Africa Gold Jewellery Design Competition was established in 1998 to showcase South African jewellery designers, to enhance jewellery manufacturing technical skills and to support the local gold jewellery industry. Training workshops for competition entrants are held each year,
while the award-winning works are exhibited and used in fashion shows and other events both locally and abroad.
A gold jewellery design competition in Brazil was launched by AngloGold in 2002, and is the first such competition in that country. The competition generated unprecedented interest, with a high quality of design and craftsmanship. Some 43 finalists contributed towards a collection of 52 pieces of innovative, high quality gold jewellery. Some of these pieces have been acquired for sale in the United States through GoldAvenue.
The Gold of Africa Museum, inaugurated by AngloGold in 2001 with the permanent endowment of the Barbier Mueller collection of West African gold objects purchased by the company in 1998, enjoyed its first full year of operation and has proved to be an attractive museum venue in Cape Town. The museum also serves as a facility for training in the jewellery industry in Cape Town.
AngloGold and Mintek, South Africa's national metallurgical research organisation, launched Project AuTEK in 2000 to research and develop industrial applications for gold. In May 2002, the project unveiled the first working prototype of a room temperature air purification unit based on a gold catalyst. The new unit is expected to be considerably cheaper to manufacture than designs based on other types of catalysts and could be used in restaurants, hospitals, hotels and office blocks.
AngloGold remains a key sponsor of the Atteridgeville Jewellery Project, established in 2000 by the Vukani-Ubuntu Community Development Project to create opportunities in the jewellery industry in South Africa for the previously disadvantaged through training and development. A new project initiated during the year by Vukani-Ubuntu and funded by AngloGold was the production and marketing of the "Kwaito" jewellery range, strongly associated with South African Kwaito music through the slogan
"Rhythm you can wear". The focus is on affordable gold jewellery that is ready to wear and that can be mass produced by the Atteridgeville project.
AngloGold undertook two new ventures with gold in the fashion industry abroad. The first was the Afridesia project, involving the sponsorship and creation of a South African clothing and gold jewellery collection at the 2002 New York Fashion Week. This project created a platform for South African designers and craftspeople at this very important forum. It also showed the value of cross fertilisation with the fashion industry for gold jewellery design. In the second important overseas project, AngloGold co-sponsored and participated in the International Herald Tribune Luxury Conference in Paris in December 2002. This participation provided AngloGold with the opportunity to access fashion industry leaders and luxury brand name retailers, and to present a case for the introduction of new gold jewellery branded products to these businesses. Both of these initiatives were well received and have given rise to further opportunities to be pursued in 2003.
An important feature in many of AngloGold's marketing projects has been the beneficiation of gold, particularly in South Africa. AngloGold's commitment to adding value to gold extends beyond mining and contributes towards the upliftment of people and the sustainability of communities.
The challenge for marketing gold today is bigger than it has ever been, given the sharp fall-off in physical demand for gold in the major developing markets resulting from the rise in price and volatility. This market has now been stagnant for well on a decade as gold jewellery has had to compete with other luxury consumer goods. AngloGold will continue its work with the WGC but will continue also to work independently in other areas of the gold market where it can exercise strategic influence.
Marketing
D
ANGLO GOLD LIMITED ANNUAL REPORT 2002
46
The Afridesia project,
involving the sponsorship and
creation of a South African clothing and gold jewellery
collection at the 2002 New
York Fashion Week, created a
platform for South African
designers and craftspeople at
this important forum.
Exploration
ANGLO GOLD LIMITED ANNUAL REPORT 2002
48
Brazil
Argentina
Serra Grande
Cerro Vanguardia
Morro Velho
USA
Jerritt
Canyon
Cripple Creek
& Victor
Mali
Tanzania
Namibia
Geita
Sadiola
Yatela
Morila
Navachab
SA operations
South Africa
Union Reefs
Sunrise Dam
Australia
Alaska
Canada
Peru
Mines Greenfields exploration areas Brownfields exploration areas
AngloGold's exploration programme
extends to four continents at a cost
of $51 million during 2002.
During 2002, the exploration focus continued in countries where AngloGold already has operations, namely in Argentina, Australia, Brazil, Tanzania, Mali, Namibia, South Africa and the United States. In addition, exploration was pursued in highly prospective areas in Alaska, Canada and Peru.
EXPLORATION EXPENDITURE BY REGION ($m)
Forecast 2003
2002
2001
South Africa
4
1
4
East & West Africa
11
11
7
South America
17
12
11
North America
13
10
7
Australia
13
14
13
Corporate (includes target generation)
3
3
2
Total
61
51
44
EXPLORATION
49
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Plan showing areas drilled in
vicinity of Geita in 2002
together with those planned
for 2003.
EXPLORATION
ANGLO GOLD LIMITED ANNUAL REPORT 2002
50
Drilling commenced on several targets at Red Lake
Joint Venture in Canada. Follow-up work will take
place in 2003.
EXPLORATION
51
ANGLO GOLD LIMITED ANNUAL REPORT 2002
and results are being compiled from preliminary drilling for follow-up work in 2003.
First phase drilling was completed at the Blue Desert
JV in Alaska.
In Nevada, three Great Basin projects were drill-tested
with a further three targets to be drill-tested during 2003.
AUSTRALIA
In Australia, exploration at Sunrise Dam continued to be successful. Work in 2002 focused on increasing the underground Mineral Resource in the Sunrise Shear zone, the Western Shear zone and Mako structures. An additional 0.6Moz was added to the Mineral Resource in 2002.
Toward the end of the year, exploration concentrated on testing extensions of the Dolly-Cosmo zone, yielding significant results from Dolly including: 19m at 4.00g/t from 934m; 2m at 15.45g/t from 728m and 24m at 5.58g/t from 374m. This drilling also intersected a new lode, Hammerhead, to the east of Cosmo. Results included 11m at 36.58g/t from 406m and 8m at 5.30g/t from 309m. Step out drilling on the Sunrise Shear zone intersected the structure up to 300m north-west of the new underground resource, with results including 4m at 8.49g/t from 502m and 7m at 3.87g/t from 635m.
At Coyote in the Tanami region, a small high-grade resource was outlined. In 2003, exploration will focus on follow- up targets in eastern and western Tanami.
Geologists near Lake Carey at Sunrise Dam, Australia region, where
exploration continues to add Mineral Resources (below).
A 3D view of the final pit shell is indicated (above).
AngloGold had Ore Reserves of 72.3Moz and Mineral Resources of 287.6Moz as of 31 December 2002.
Mineral Resources and Ore Reservesare reported in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves (the JORC Code), together with the South African Code for the Reporting of Mineral Resources and Mineral Reserves (the SAMREC Code), for the South African operations.
Mineral Resources
Mineral Resources (excluding the Free State mines) calculated at a gold price of $400/oz, increased by 5.9Moz or 2% to 287.6Moz at the end of 2002. Ongoing exploration programmes added some 3.6Moz over and above the 6.5Moz of Mineral Resources that where depleted in 2002.
Some of the largest increases in resource are:
* an increase of 3.7Moz at Tau Lekoa to 17.4Moz, due primarily to the incorporation of adjacent ground at Goedgenoeg;
* an increase of 1Moz to 12.8Moz at Moab Khotsong, due mainly to revised geological modelling;
* an increase of 0.8Moz to 8.1Moz at Geita. This increase includes recent exploration successes;
* an increase at Navachab of 1.8Moz to 4.6Moz. This was largely due to changes in the Namibian Dollar/ US Dollar exchange rate and the effect of this on the Mineral Resource constraints;
* an increase of 1.9Moz at Cerro Vanguardia to 3.5Moz, due partly to the increased stake acquired during 2002 and partly due to some brownfields exploration successes.
Ore Reserves
Ore Reserves, estimated using a gold
price of $325/oz at an exchange rate of
R10.50 to the Dollar, show a year-on-year
increase of some 12.9Moz to 72.3Moz. The
higher gold price resulted in feasibility
studies being conducted at several of the
South African operations. This gave rise to
a net increase of 10.9Moz or 22% to
47.5Moz, excluding the Free State mines.
* an increase of 4.6Moz at Mponeng mainly due to the inclusion of the Carbon Leader and VCR below 120 level;
* an increase of 4.3Moz at Moab
Khotsong due to the inclusion of Phase 2 which aims to exploit the Vaal Reef below 101 level;
* an increase of 0.8Moz at TauTona
as a result of the inclusion of the Carbon Leader below 120 level, the area East of the Bank Dyke on 116 level and area "A" on the VCR;
* increases of 1.2Moz and 0.7Moz at Savuka and Tau Lekoa respectively due to changes in mine design leading to additional life at both operations;
* an increase of 0.8Moz at Geita due
to the redesign of the Nyankanga, Geita Hill and Lone Cone pits, as well as the inclusion of Chipaka, Area 3W and Roberts;
* an increase of 1.1Moz at Cerro Vanguardia mainly as a result of Anglo- Gold's increase in ownership to 92.5%.
The Ore Reserves are relatively
insensitive to changes in gold price and exchange rates of up to 10%, positive or negative.
AngloGold will continue to pursue a strategy of increasing value-adding reserves through expansion projects, brownfields and greenfields exploration and acquisition of new assets.
Competent persons
Competent persons, designated in terms of
the JORC (and SAMREC) Codes and
taking corporate responsibility for the
reporting of AngloGold's Mineral
Resources, are:
• V A Chamberlain, MSc (Mining
Engineering), BSc (Hons) (Geology), MAusIMM, 17 years' experience.
• M F O'Brien, MSc (Engineering),
BSc (Hons) (Geology), Dip Data, Pr.Sci.Nat., MAusIMM, 23 years' experience.
Designated competent persons taking corporate responsibility for the reporting of Ore Reserves are:
• B W Guenther, BSc (Mining
Engineering), MAusIMM, 22 years' experience.
• D L Worrall, ACSM, MAusIMM,
22 years' experience.
• J van Zyl Visser, BSc (Mineral
Resource Management), PLATO, 16 years' experience.
Notes
A detailed breakdown of the Mineral
Resources and Ore Reserves, together
with plans of the South African
operations, is available in a supplementary
statistics document, provided in the
annual report section of the AngloGold
website (www.anglogold.com) and may be
downloaded as PDF files using Adobe
Acrobat Reader. This information is also
obtainable from the AngloGold offices at
the addresses given on page 144.
Mineral resources
&
ore reserves
ANGLO GOLD LIMITED ANNUAL REPORT 2002
52
53
MINERAL RESOURCES & ORE RESERVES
ANGLO GOLD LIMITED ANNUAL REPORT 2002
ORE RESERVES (as at 31 December 2002)
METRIC
IMPERIAL
Tonnes
Grade
Contained Tons
Grade
Contained
Mt
g/t
gold t
Mt
oz/t
gold Moz
South
Africa***
Proved
94.7 2.22 210.4 104.4 0.065 6.8
Probable
246.3 5.14
1,267.2 271.5 0.150 40.7
Total
341.0 4.33
1,477.5 375.9 0.126 47.5
East & West Africa*
Proved
21.5
3.50
75.1
23.7
0.102
2.4
Probable
52.3 3.73 195.3 57.7 0.109 6.3
Total
73.8 3.66 270.4 81.4 0.107 8.7
South
America*
Proved
15.3 6.22 95.5 16.9 0 .181 3.1
Probable
12.7 4.92 62.4 14.0 0.143 2.0
Total
28.0 5.63 157.8 30.9 0.164 5.1
North
America*
Proved
57.8 1.34 77.7 63.7 0.039 2.5
Probable
69.4 0.99 68.8 76.5 0.029 2.2
Total
127.3 1.15 146.5 140.3 0.034 4.7
Australia*
Proved
49.0 1.42 69.7 54.0 0.042 2.2
Probable
100.4 1.26 126.4 110.7 0.037 4.1
Total
149.4 1.31 196.1 164.7 0.038 6.3
Totals*
Proved
238.3 2.22 528.3 262.7 0.065 17.0
Probable
481.2 3.57
1,720.0 530.4 0.104 55.3
Total
719.5 3.12 2,248.3 793.1 0.091 72.3
*
Reserves attributable to AngloGold.
*** Excludes the Free State mines which were sold effective from 1 January 2002.
MINERAL RESOURCES* (as at 31 December 2002)
METRIC
IMPERIAL
Tonnes
Grade
Contained Tons
Grade
Contained
Mt
g/t
gold t
Mt
oz/t
gold Moz
South
Africa***
Measured
300.3 1.84 552.1 331.0 0.054 17.8
Indicated
647.7 4.42
2,865.1 714.0 0.129 92.1
Inferred
463.1 7.97
3,692.3 510.5 0.233 118.7
Total
1,411.0
5.04 7,109.5 1,555.4 0.147 228.6
East & West Africa** Measured
37.5
2.68
100.7 41.3
0.078
3.2
Indicated
107.6 2.81 301.9 118.6 0.082 9.7
Inferred
144.4 1.68 242.2 159.2 0.049 7.8
Total
289.5 2.23 644.7 319.1 0.065 20.7
South
America**
Measured
32.4 4.41 143.1 35.7 0.129 4.6
Indicated
22.1 4.68 103.4 24.4 0.137 3.3
Inferred
42.2 6.20 261.8 46.5 0.181 8.4
Total
96.7 5.26 508.4 106.6 0.153 16.3
North
America**
Measured
85.1 1.24 105.7 93.8 0.036 3.4
Indicated
107.3 1.12 120.1 118.3 0.033 3.9
Inferred
69.2 1.28 88.7 76.3 0.037 2.9
Total
261.6 1.20 314.6 288.4 0.035 10.1
Australia**
Measured
61.2 1.41 86.4 67.5 0.041 2.8
Indicated
143.5 1.22 175.0 158.2 0.036 5.6
Inferred
89.7 1.18 106.3 98.9 0.035 3.4
Total
294.4 1.25 367.7 324.5 0.036 11.8
Totals**
Measured
516.5 1.91 988.0 569.3 0.056 31.8
Indicated
1,028.2
3.47 3,565.5 1,133.4 0.101 114.6
Inferred
808.6 5.43
4,391.3 891.3 0.158 141.2
Total
2,353.2
3.80 8,944.8 2,594.0 0.111 287.6
*
Inclusive of the ore reserve component.
** Resources attributable to AngloGold. *** Excludes the Free State mines which were sold effective from 1 January 2002. NB: Rounding of figures may result in computational discrepancies.
54
Executive directors
R M GODSELL (50)
BA, MA
Chief executive officer
Bobby Godsell was appointed to the AngloGold board as chief executive officer in April 1998 and as chairman in December 2000. He relinquished his role as chairman of AngloGold in May 2002. He has 29 years of service with companies associated with the mining industry, and has served as a non-executive director of Anglo American plc since March 1999. He is also the immediate past chairman of the World Gold Council.
J G BEST (54)
ACIS, ACIMA, MBA
Finance director
Jonathan Best was appointed finance director of AngloGold in April 1998. He has had 34 years of service with companies associated with the mining industry.
D L HODGSON (55)
BSC (MINING ENGINEERING), BSC (CIVIL
ENGINEERING), BCOM, AMP (HARVARD
Chief operating officer
Dave Hodgson was appointed to the AngloGold board in November 2001 as chief operating officer. He was previously executive officer responsible for AngloGold's South Africa region. He has more than 30 years of mining experience.
K H WILLIAMS (54)
BA
Marketing director
Kelvin Williams was appointed marketing director of AngloGold in April 1998. He has 27 years of service in the gold mining industry. He is chairman of Rand Refinery and a director of the World Gold Council.
Non-executive directors
R P EDEY (60)
FCA
Chairman
Russell Edey was appointed to the AngloGold board in April 1998 and as deputy chairman in December 2000. In May 2002 he was appointed chairman when Bobby Godsell relinquished this office. Based in the United Kingdom, he is deputy chairman of N M Rothschild Corporate Finance and a director of a number of other companies.
DR T J MOTLATSI (51)
HOND SOC SCI (LESOTHO)
Deputy chairman
James Motlatsi was appointed to the AngloGold board in April 1998 and as deputy chairman in May 2002 upon Russell Edey being appointed chairman. He has been associated with the South African mining industry since 1970, and is the immediate past president of the National Union of Mineworkers (NUM). He is also chief executive officer of TEBA Limited.
F B ARISMAN (58)
MSC (FINANCE)
Frank Arisman was appointed to the AngloGold board in April 1998. He resides in New York and is managing director of J P Morgan Chase, a company he joined in 1972.
MRS E LE R BRADLEY (64)
BSC, MSC
Elisabeth Bradley was appointed to the AngloGold board in April 1998. She is executive chairman of Wesco Investments Limited, chairman of Toyota South Africa (Proprietary) Limited and a director of a number of other companies. She is also deputy chairman of the South African Institute of International Affairs.
C B BRAYSHAW (67)
CA(SA), FCA
Colin Brayshaw was appointed to the AngloGold board in April 1998. He is a retired managing partner and chairman of Deloitte & Touche and is a non-executive director of a number of other companies including Anglo Platinum, Datatec and Johnnic Holdings.
DR V K FUNG (57)
PH D (BUSINESS ECONOMICS), MSC
(ELECTRICAL ENGINEERING)
Victor Fung was appointed to the AngloGold board in April 1998. Based in Hong Kong, he is chairman of the Li & Fung group of companies, Hong Kong, the Hong Kong Airport Authority and the Hong Kong University Council.
Dr Fung has advised that he will not
be making himself available for re- election when he retires by rotation from the board at the company's forthcoming annual general meeting.
A W LEA (54)
BA (HONS)
Tony Lea was appointed to the AngloGold board in July 2001. He is finance director of Anglo American plc.
W A NAIRN (58)
BSC (MINING ENGINEERING)
Bill Nairn has been a member of the AngloGold board since January 2000. He was re-appointed to the board in May 2001, having previously been alternate director to Tony Trahar. He is group technical director of Anglo American plc.
J OGILVIE THOMPSON (69)
MA
Julian Ogilvie Thompson was appointed to the AngloGold board in April 1998. He is a non-executive director of Anglo American Corporation. He is a non- executive director of De Beers Consolidated Mines and a director of a number of other companies.
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Directors and executive management
55
DIRECTORS AND EXECUTIVE MANAGEMENT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
D D BARBER (50)
Members of the executive committee R M GODSELL (50)
R CARVALHO SILVA (51)
Roberto Carvalho Silva joined the Anglo American group in Brazil in 1973 and was appointed president and CEO of AngloGold South America in January 1999. He became an executive officer in February 2000.
Richard Duffy joined Anglo American Corporation 16 years ago. He became an executive officer of AngloGold in 1998 and was given the business planning portfolio in November 2000.
Jim Komadina has 25 years of diverse mining experience and was appointed president and CEO of AngloGold North America in 1999. He became an executive officer in February 2000.
Steve Lenahan has been working in the mining industry since 1978 when he started his career at De Beers. He was appointed investor relations executive in 1998 and assumed responsibility for corporate affairs in early 2001.
Bob Micsak served as vice president, general counsel and chief environmental officer of AngloGold North America before he was appointed an AngloGold executive officer with the environment as his portfolio in August 2000. He assumed responsibility for AngloGold's corporate legal affairs in September 2002.
Neville Nicolau became the executive officer responsible for AngloGold's South Africa region in November 2001. He has 24 years of mining experience.
MS Y Z SIMELANE (37)
56
Directors
R P Edey Chairman
R M Godsell Chief Executive Officer
J G Best Finance Director
C B Brayshaw Chairman, Audit Committee
Managing Secretary
Ms Y Z Simelane
ANNUAL FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Directors' approval
Ms Y Z Simelane Managing Secretary
Johannesburg 3 March 2003
Secretary's certificate
We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual financial statements are free of material mis-statement.
AN AUDIT INCLUDES
disclosures in the annual financial statements;
assessing the accounting principles used and significant estimates
made by management; and
evaluating the overall financial statement presentation.
In our opinion the annual financial statements and group annual financial statements fairly present, in all material respects, the financial position of the company and the group at 31 December 2002, and the results of operations and cash flows for the year then ended in accordance with South African Statements of Generally Accepted Accounting Practices, International Accounting Standards, and in the manner required by the Companies Act in South Africa.
ERNST & YOUNG Registered Accountants and Auditors
Johannesburg
Chartered Accountants (SA)
3 March 2003
Report of the independent auditors on the annual financial statements
57
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Introduction
The board of directors of AngloGold Limited welcomes the
King Report on Corporate Governance for South Africa 2002
(King II) released on 26 March 2002.
Although a great deal of the company's practices are already in line with the principles set out in King II, action plans have
been drawn up to address specific areas where the company's
governance position needs to be aligned with the Report's
recommendations.
The company is registered with the Securities and Exchange Commission (SEC) in the United States of America and its
ordinary shares are quoted on the New York Stock Exchange
(NYSE) in the form of American Depositary Shares, in terms of
a sponsored American Depositary Receipt Programme
administered by The Bank of New York. Accordingly,
AngloGold is bound by the Sarbanes-Oxley Act of 2002 and is
instituting a policy and procedures for implementing the
requirements of that Act and those of the NYSE.
Further reinforcing its resolve to continue pursuing a policy of global best practice in business management and corporate
governance, the company achieved the following milestones
during the year under review:
* The separation of the combined role of chairman and chief executive officer with the appointment of a non-executive
director as chairman.
* AngloGold's annual report 2001 being adjudged the "Best Overall Annual Report" at the premier South African
Annual Report Awards ceremony, sponsored, amongst others,
by the JSE Securities Exchange South Africa (JSE).
* The adoption of a mission and values statement in line with the present and longer-term strategic direction of the
AngloGold group. The full text of the statement is to be found
on the inside front cover of this report.
* The adoption of an entirely new set of Memorandum and Articles of Association to take cognisance of numerous
amendments to companies' legislation in South Africa over
many years, changes to the Listings Requirements of the JSE,
the impact of STRATE (Share Transactions Totally Electronic),
the requirements of King II and changes in international
corporate administrative practices.
* The publication of the following documents:
An HIV/AIDS Report 2001/2002 which details the company's
comprehensive response to AIDS in the
workplace. This publication has been augmented with
a subsequent announcement that AngloGold has
extended its antiretroviral therapy implementation
project to include all eligible employees;
Towards Sustainability A Social Investment Report
2001/2002. The report sets out the company's
obligations and role as a corporate citizen and reviews
the health and safety of employees, the management of
environmental strategy and programmes for social
investment.
The board of directors
The company has a unitary board structure which currently
comprises four executive directors and 11 non-executive directors
three of whom have alternates. The directors are identified on
pages 54 and 55 of this report.
The directors are committed to the principles of corporate discipline, transparency, independence, accountability,
responsibility, fairness and social responsibility.
Effective control of management is exercised through the executive directors. They are held accountable by means of
regular reports to the board and are measured against agreed
performance criteria and objectives relative to the current
business climate and the prospects in each business unit. The non-
executive directors derive no benefits other than their fee which is
fixed by the shareholders in general meeting. The non-executive
directors are high-calibre individuals and make a significant
contribution to the board's deliberations and decisions. All
directors have the requisite knowledge, experience and ability
required to properly carry out their duties in meeting the present
and future requirements of the company. All participate actively
in the proceedings at meetings whether present personally or by
teleconference or video conference facilities.
The directors have access to the advice and services of a
managing secretary, as well as a company secretary, who are both
responsible to the board for ensuring compliance with procedures
and regulations of a statutory nature, as well as playing an active
role in the company's corporate governance process. Directors are
entitled to seek independent professional advice concerning the
affairs of the group at the group's expense, should they believe
that course of action would be in the best interests of the group.
There are no contracts of service between the directors and the company or any of its subsidiaries that are terminable at
periods of notice exceeding one year and requiring the payment of
compensation. All directors are subject to retirement by rotation
and re-election by shareholders at least once every three years.
In addition, all directors are subject to re-election by shareholders at the first annual general meeting following their appointment.
The appointment of new directors is approved by the board as a
whole. The names of the directors submitted for re-election are
accompanied by sufficient biographical details in the notice of the
forthcoming annual general meeting to enable shareholders to make
an informed decision in respect of their re-election.
The board retains full and effective control over the group,
meeting four times a year with additional meetings being
arranged when necessary, to review strategy, planning,
operational and financial performance, acquisitions and disposals,
major capital expenditure, stakeholder communications and
other material matters reserved for its decision. The board is also
responsible for monitoring the activities of executive management
within the group. Board meetings are held in South Africa and
internationally. In addition, there is provision in the company's
Articles of Association for decisions to be taken between meetings
by way of directors' written resolutions.
An agenda and supporting papers are distributed to all
directors prior to each board meeting. Appropriate explanations
Corporate governance
58
CORPORATE GOVERNANCE
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Board committees
The board has also established a number of standing committees
to enable it to properly discharge its duties and responsibilities
and to effectively fulfil its decision-making process. Each
committee acts within written terms of reference under which
specific functions of the board are delegated with defined
purposes, membership requirements, duties and reporting
procedures. Minutes of the meetings of these committees are
circulated to members of the committees and the board.
Remuneration of non-executive directors for their services on
the committees concerned is determined by the board. Currently,
this comprises in the case of each committee: Chairman
R50,000 per annum; Members R30,000 per annum each. The
committees are subject to regular evaluation by the board with
respect to performance and effectiveness. Chairmen of the board
committees, or their representatives, are required to attend the
annual general meetings to answer any questions raised
by shareholders.
P G Whitcutt
59
CORPORATE GOVERNANCE
ANGLO GOLD LIMITED ANNUAL REPORT 2002
E
MPLOYMENT EQUITY AND DEVELOPMENT COMMITTEE
(Previously the Employment Equity Committee) Dr T J Motlatsi (Chairman), F B Arisman, R M Godsell, D L Hodgson and W A Nairn
Date of meeting
Apologies tendered
29 January
Dr V K Fung Dr T J Motlatsi
26 April
Dr T J Motlatsi
29 July
Dr V K Fung R M Godsell
60
CORPORATE GOVERNANCE
ANGLO GOLD LIMITED ANNUAL REPORT 2002
REMUNERATION COMMITTEE
TREASURY COMMITTEE
The members of this Committee are: C B Brayshaw (Chairman) - Non-executive director J G Best - Executive director finance S Cassim - East and West Africa region financial manager R N Duffy - Executive officer business planning Ms D Earp - Manager corporate accounting R P H Hayes - Treasury manager Ms H H Hickey - Group internal audit manager Ms C A Hoad - Risk manager M P Lynam - Treasurer K H Williams - Executive director marketing
FINANCE COMMITTEE
This Committee, which meets on a weekly basis to review matters essentially of a financial and administrative nature, comprises: J G Best (Chairman) - Executive director - finance R C Croll - Manager - mining valuations P J G Dennison - Manager - mergers and acquisitions R N Duffy - Executive officer - business planning Ms D Earp - Manager - corporate accounting Ms H H Hickey - Group internal audit manager M P Lynam - Treasurer O C Murphy - Corporate taxation manager
61
CORPORATE GOVERNANCE
ANGLO GOLD LIMITED ANNUAL REPORT 2002
The board has ultimate responsibility for the total risk management process within the group. Management is accountable to the board and has established a group- wide system of internal control to manage significant group risk. This system assists the board in discharging its responsibility for ensuring that the wide range of risks, associated with the group's global operations, are effectively managed in support of the creation and preservation of shareholder wealth.
Matters under this heading are given extensive coverage on a regional basis in the Review of Operations between pages 18 and 45.
Appointment and removal of the managing secretary and company secretary are matters for the board.
62
CORPORATE GOVERNANCE
ANGLO GOLD LIMITED ANNUAL REPORT 2002
No employee may deal directly or indirectly in AngloGold ordinary shares on the basis of unpublished price-sensitive information regarding its business or affairs. No director or officer may trade in warrants and other derivative instruments of the company at any time. Similarly, no director or officer may trade in shares of the company during a closed period determined by the board. A list of persons regarded as officers for this purpose has been approved by the board and is revised from time to time. Closed periods are operated prior to the publication of the quarterly, half-yearly and year-end results. Where appropriate, a closed period is also operated during periods where major transactions are being negotiated and a public announcement is imminent.
The company has in place a variety of strategies and structures, which are designed to promote employee participation. These strategies and structures are further developed and adapted from time to time to meet variations in operational requirements and to accommodate changing circumstances. Management and employee representatives meet in formal and informal forums at company and operational levels to share information and to address matters of mutual interest.
AngloGold subscribes to a policy of full, accurate and consistent communication in respect of both its financial and operating affairs.
The company is committed to the highest standards of integrity and ethical conduct in dealings with all its stakeholders.
UBS Warburg acts as sponsor to the company in compliance with the Listings Requirements of the JSE.
63
ANGLO GOLD LIMITED ANNUAL REPORT 2002
AngloGold has operations in East, West and Southern Africa, the United States of America, Australia, Brazil and Argentina. As part of AngloGold's intention to maintain its position as a global gold company it has a Remuneration Policy which seeks to:
align the behaviour and performance of executives with thecompany's strategic goals and to act in the overall interests of shareholders;
ensure the appropriate mix of short-, medium- and long term rewards and incentives, with the latter being closely linked to structured company performance targets and strategic objectives;
ensure that regional management is competitively rewarded within a global remuneration policy, which recognises both local and global markets.
The following elements constitute executive remuneration:
Annual performance bonus
Participation in the Share Option Scheme
Benefits, including pension, disability and death cover and healthcare.
Remuneration report
ANGLO GOLD LIMITED ANNUAL REPORT 2002
64
AngloGold Limited conducts mining operations in Africa, North and South America and Australia and undertakes exploration activities worldwide. In addition, the company is involved in the manufacturing, marketing and selling of gold products, as well as the development of markets for gold.
Pursuant to the sub-division of the company's ordinary shares with effect from the close of business on 24 December 2002, all references to the authorised and issued share capital of the company in this report have been restated to take cognisance of the sub-division.
On 27 February 2003 it was announced that, pursuant to an unsolicited offer from Queenstake Resources USA Inc (Queenstake), the company had entered into a purchase and sale agreement for the disposal of its 70% stake in the Jerritt Canyon Joint Venture in North America. The consideration payable by Queenstake to the Joint Venture partners will comprise: $8m on closure of the transaction which is expected to be no later than 31 March 2003, $6m in deferred payments and certain additional royalty payments. In terms of the agreement Queenstake has undertaken to accept full closure and reclamation and other liabilities.
Holding company The company's holding and ultimate holding companies are respectively:
* Anglo South Africa Capital (Proprietary) Limited * Anglo American plc (registered in the United Kingdom)
The effective shareholding of Anglo American plc in the issued share capital of the company at the undermentioned dates was as follows:
24 February
31 December
31 December
2003
2002
2001
Ordinary shares held Number
114,457,368
114,457,368
114,457,368
Percentage
51.40
51.41
53.17
At a general meeting on 5 December 2002, shareholders approved, inter alia, a special resolution for the sub-division of the company's authorised and issued ordinary share capital on a 2 for 1 basis with effect from the close of business on 24 December 2002. The special resolution was registered on 10 December 2002.
ISSUED
2002
2001
Number of shares
Rand
Number of shares
Rand
At 1 January
215,268,116
53,817,029
214,042,174
53,510,544
Issues during year Issue of shares in terms of Normandy top-up facility*
127,156
31,789
16,474
4,118
Normandy share-swap*
6,403,236
1,600,809
466,366
116,592
AngloGold odd-lot offer**
278,196
69,549
Exercise of options by participants in the AngloGold Share Incentive Scheme
478,720
119,680
718,000
179,500
Acacia Employee Option Plan
66,598
16,650
25,102
6,275
At 31 December
222,622,022
55,655,506
215,268,116
53,817,029
Issues subsequent to year end Exercise of options by participants in the AngloGold Share Incentive Scheme
76,732
19,183
Acacia Employee Option Plan
2,100
525
At 24 February 2003
222,700,854
55,675,214
*
Arising from the offer by AngloGold to shareholders of Normandy Mining Limited, a gold mining company registered in Australia, to acquire the entire issued share capital of Normandy. As acceptances in respect of this offer constituted only 7.11% of Normandy's issued share capital, with no possibility of AngloGold obtaining majority control of Normandy, the offer closed on 18 January 2002. The company's holding of Normandy shares was disposed of in January 2002 and the proceeds applied towards repaying debt owed by the AngloGold group.
Directors' report
DIRECTORS' REPORT
65
ANGLO GOLD LIMITED ANNUAL REPORT 2002
RESULTS OF ODD-LOT OFFER
Number of
Number of
Value
shareholders
shares
Rand
Holders electing/deemed to have elected to sell ordinary shares at R246.66 per share (offer price)
11,213
217,338
53,608,591
Holders electing to purchase ordinary shares at R234.325 per share (a 5% discount to offer price)
4,643
495,534
116,116,004
Total ordinary shares issued
278,196
62,507,413
Includes nominee companies and brokers acting on behalf of beneficial shareholders.
Prior to the odd-lot offer to shareholders, the company had a total of 31,013 shareholders and at 31 January 2003 this number had
reduced to 16,284. A total of 2,098 shareholders, holding in aggregate 50,794 ordinary shares, elected to retain their odd-lot holdings of less than 100 shares (post sub-division).
UNISSUED
2002
2001
Number of shares
Number of shares
At 1 January
184,731,884
185,957,826
Issues during year
7,353,906
1,225,942
Maximum number of shares available for allocation for purposes of the Share Incentive Scheme
6,122,106
5,919,873
Unissued shares under the control of the directors at 31 December
171,255,872
178,812,011
Issues subsequent to year end
78,832
Additional number of shares available for allocation for purposes of the Share Incentive Scheme
2,167
Balance of unissued shares under the control of the directors at 24 February 2003
171,174,873
At 31 December 2002, the company had in issue through The Bank of New York as Depositary, and listed on the New York Stock Exchange (NYSE), 39,879,957 (2001: 30,104,646) American Depositary Shares (ADSs). Each ADS is equal to one ordinary share.
66
As approved by shareholders, AngloGold operates two share incentive schemes (as detailed below), for the purpose of providing an incentive to executive directors, executive officers and managers of the company and its subsidiaries to identify themselves more closely with the fortunes of the group and its continued growth, and also to promote the retention of such employees by giving them an opportunity to acquire shares in the company. Employees participate in the schemes to the extent that they are granted options.
The maximum number of ordinary shares that may be allocated for the purposes of the schemes, equivalent to 2.75% of the total number of ordinary shares in issue at that date, is:
24 February
31 December
31 December
2003
2002
2001
6,124,273
6,122,106
5,919,873
All options which have not been exercised within ten years from the date on which they were granted automatically lapse, unless otherwise stated.
Non-executive directors are not eligible for participation in the share incentive schemes.
ANGLO GOLD SHARE INCENTIVE SCHEME
This share incentive scheme provides for the granting of options, based on two separate criteria:
Time related Time related options were approved by shareholders at the general meeting held on 4 June 1998, and amended by shareholders at the annual general meeting held on 30 April 2002.
Time related options granted, may be exercised as follows:
Percentage
Period after date of grant of options
20
2 years
40
3 years
60
4 years
100
5 years
No further options will be granted under this plan which will terminate on 1 February 2012, being the date on which the last options
may be exercised or will expire.
The movement in respect of time related options during the period 1 January 2002 to 24 February 2003 was as follows:
Options
Average
exercise price
per ordinary
Number
share
At 1 January 2002
2,565,600
R121.14
Movements during year - Granted*
108,000
R190.21
- Exercised
478,720
R118.79
- Lapsed terminations
35,600
R145.55
At 31 December 2002
2,159,280
R124.72
Subsequent to year end - Exercised
76,732
R121.71
- Lapsed - terminations
20,000
R137.73
At 24 February 2003
2,062,548
R124.70
*
Includes 64,000 options granted in 2001 at an average price of R159.36, recorded in 2002. (Prior year adjustment).
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
DIRECTORS' REPORT
67
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Performance related Performance related options were approved by shareholders at the annual general meeting held on 30 April 2002.
The movement in respect of performance related options during the period 1 January 2002 to 24 February 2003 was as follows:
Options
Average
exercise price
per ordinary
Number
share
At 1 January 2002
Movements during year - Granted
1,182,500
R299.50
- Exercised
- Lapsed - terminations
3,400
R299.50
At 31 December 2002
1,179,100
R299.50
Subsequent to year end - Exercised
- Lapsed - terminations
24,600
R299.50
At 24 February 2003
1,154,500
R299.50
Options
Average
Ordinary
exercise price
shares
per ordinary
issued
Number
share
At 1 January 2002
1,060,600
2,565,600
R121.14
Movements during year - Granted*
1,290,500
R290.35
- Exercised
478,720
478,720
R118.79
- Lapsed - terminations
39,000
R158.97
At 31 December 2002
1,539,320
3,338,380
R186.45
Subsequent to year end - Exercised
76,732
76,732
R121.71
- Lapsed - terminations
44,600
R226.96
At 24 February 2003
1,616,052
3,217,048
R187.43
*
Includes prior year adjustment.
Analysis of options in issue at 24 February 2003:
Holding
Holders
Number
Value R000
1-
100
101-
500
501- 1,000
233
214,000
64,093
1,001- 5,000
285
499,700
139,938
5,001- 10,000
127
951,100
162,567
10,001- 100,000
57
1,357,948
212,325
Over 100,000
1
194,300
24,055
Total
703
3,217,048
602,978
68
ACACIA EMPLOYEE OPTION PLAN
The movement in respect of options during the period 1 January 2002 to 24 February 2003 was as follows:
Number Equivalent Ordinary
Average issue
of
AngloGold
shares
price of AngloGold
options
ordinary shares
issued
ordinary shares
At 1 January 2002
1,041,400
72,898
25,102
R122.83
Movements during year - Issued
-
-
- Exercised
951,400
66,598
66,598
R175.41
- Lapsed
-
-
At 31 December 2002
90,000
6,300
91,700
R161.02
Subsequent to year end - Exercised
30,000
2,100
2,100
R146.94
At 24 February 2003
60,000
4,200
93,800
R160.71
The financial statements set out fully the financial position, results of operations and cash flows of the group and the company for the financial year ended 31 December 2002. A synopsis of the financial results for the year is set out in the Financial Review on pages 14 to 16.
Review of operations The performance of the various regions are comprehensively reviewed on pages 18 to 45.
Dividends DIVIDEND POLICY
DIVIDENDS PAID SINCE 1 JANUARY 2002
Final dividend
Interim dividend
Final dividend
number 91
number 92
number 93
Declaration date
30 January 2002
30 July 2002
30 January 2003
Last date to trade ordinary shares cum dividend
15 February 2002
16 August 2002
14 February 2003
Record date
22 February 2002
23 August 2002
21 February 2003
Amount per ordinary share - South African currency (cents) 550
675
675
- United Kingdom currency (pence) 34.19
42.25
48.43
Amount per CDI* - Australian currency (cents) 18.88
24.34
27.00
Payment date
4 March 2002
30 August 2002
28 February 2003
Amount per ADS** - United States currency (cents)
49.06
63.81
82.12
Payment date
14 March 2002
10 September 2002
10 March 2003
*
Each CDI (CHESS Depository Interest) is equal to one-fifth of one ordinary share.
** Each ADS (American Depositary Share) is equal to one ordinary share.
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
69
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
The company's borrowing powers are unlimited. At 31 December 2002, the group's borrowings totalled $926m, R7,938m (2001: $987m, R11,811m).
With effect from 1 January 2002 the company disposed of its Free State assets to Harmony Gold Mining Company Limited and African Rainbow Minerals (Proprietary) Limited, for a consideration of R2.2bn (excluding the refund for recoupments taxation of R688m). In terms of the agreement of sale the company received a cash payment of R1.8bn on 23 April 2002, together with interest thereon at the call rate calculated from 1 January 2002 to 22 April 2002. The balance of the consideration, R400m, is payable in cash on 1 January 2005.
In July 2002 the company acquired an additional 46.25% of the equity, as well as the total loan assignment, of Cerro Vanguardia SA, a company conducting gold mining operations in Argentina, from Prez Companc International SA for a gross consideration of $105m, thereby increasing its interest in Cerro Vanguardia to 92.5%.
Details of special resolutions and other resolutions of a significant nature passed by the company and its subsidiaries during the year under review, requiring disclosure in terms of the Listings Requirements of the JSE, are as follows:
Nature of resolution
Effective date
AngloGold Limited
Passed at the annual general meeting held on 30 April 2002:
General approval for the acquisition by the company, or a subsidiary of the company, of its own shares
8 May 2002
Amendment to the company's articles of association substituting a more simplified version of the existing Article 70, pertaining to the determination of directors' remuneration by means of an ordinary resolution of shareholders in general meeting
8 May 2002
Passed at a general meeting held on 5 December 2002:
Adoption of a new memorandum and articles of association
10 December 2002
Sub-division of the company's ordinary shares on a 2 for 1 basis
10 December 2002
A specific approval for the acquisition by the company of any excess ordinary shares arising in terms of the company's odd-lot offer to shareholders
10 December 2002
Subsidiaries
Chellaston Limited*
Acquisition of a 46.25% interest in the equity of Cerro Vanguardia SA
26 July 2002
Walsdon Limited*
Change of name to AngloGold International Holdings Limited
6 December 2002
AngloGold Investments
Change of name to AngloGold (Gibraltar) Holdings Limited
6 December 2002
(Senegal) Limited*
AngloGold International
Change of name from AngloGold International
Holdings Socit Anonyme**
Holdings Limited
10 December 2002
*
Incorporated in the British Virgin Islands
** Incorporated in Luxembourg
70
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Annual general meeting
At the 58th annual general meeting held on 30 April 2002, shareholders passed ordinary resolutions relating to:
* the adoption of the annual report for the year ended 31 December 2001;
* the re-election of Mr J G Best, Mrs E le R Bradley,
Mr C B Brayshaw, Mr D L Hodgson, Mr A W Lea, Mr W A Nairn and Mr K H Williams as directors of the company;
* the renewal of the general authority placing the unissued ordinary shares of the company under the control of the directors;
* the granting of a general authority to issue ordinary shares in the capital of the company for cash, subject to certain limitations
in
terms of the Listings Requirements of the JSE;
* increases in annual directors' remuneration, with effect from 1 May 2002, as follows:
- Directors: from R50,000 to R100,000
- Chairman: from R80,000 to R200,000
- Deputy Chairman: from R80,000 to R150,000
- A travel allowance of $2,000 per meeting payable to each director, including the chairman and deputy chairman, who travel
internationally to attend board meetings of the company;
* an amendment to the rules of the share incentive scheme to provide for the exercise of options to be based on a condition, related
to the performance of the company, to be determined by the directors and which will be objective and specified.
Details
concerning the special resolutions passed by shareholders at this meeting are
disclosed on page 69.
Notice of the 59th annual general meeting, which is to be
held in Johannesburg at 11:00 on Wednesday, 30 April 2003, is enclosed as a separate document with the annual report. Additional copies of the notice of meeting may be obtained from the company's corporate
contacts and the share registrars or may be accessed from the company's website.
General meeting
A general meeting of shareholders was held on 5 December 2002 at which the undermentioned ordinary resolutions were passed:
* approval of an odd-lot offer to ordinary shareholders of the company; * the granting of an authority to a director of the company to implement all resolutions passed at the meeting. Details concerning the special resolutions passed by shareholders at this meeting are disclosed on page 69.
Memorandum and Articles of Association A new memorandum and articles of association were adopted by shareholders in terms of a special resolution passed at the general meeting held on 5 December 2002. The special resolution was registered on 10 December 2002. These documents which better reflect the existing regulatory environment and serve the company's requirements, replace the memorandum of association that had been in existence since the company's incorporation under its former name of Vaal Reefs Exploration and Mining Company Limited in 1944 and the set of articles of association adopted in 1977.
Directorate and secretary The only change in the composition of the board of directors from the beginning of the accounting period to the date of this report was the appointment of Mr D D Barber as alternate director to Mr J Ogilvie Thompson with effect from 29 April 2002.
The directors retiring by rotation at the forthcoming annual general meeting in terms of the articles of association are Mr F B Arisman, Mr R P Edey, Dr V K Fung, Mr R M Godsell and Dr T J Motlatsi. Dr Fung has advised that he wishes to retire from the board and, therefore, has not made himself available for re-election. However, Mr Arisman, Mr Edey, Mr Godsell and Dr Motlatsi, being eligible, offer themselves for re-election.
The names of the directors and alternate directors of the company in office at the date of this report are listed on page 143.
Biographies of the board of directors appear on pages 54 and 55.
There has been no change in the offices of managing secretary and company secretary whose names and business and postal addresses are set out on page 143.
71
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Directors' emoluments The following tables record the emoluments paid to each director: All figures have been stated to the nearest R000.
Bonuses and
Pre-tax
performance
Pension
gains on
related
scheme
share options
Other
Salary
payments
contributions
exercised
benefits
Total
EXECUTIVE DIRECTORS '
REMUNERATION 2002
R M Godsell (Chief Executive Officer)
4,217
1,295
496
283
6,291
J G Best
2,476
928
300
2,130
32
5,866
D L Hodgson
2,475
678
300
2,972
100
6,525
K H Williams
2,673
898
333
2,154
150
6,208
Total
11,841
3,799
1,429
7,256
565
24,890
EXECUTIVE DIRECTORS '
REMUNERATION 2001*
R M Godsell (Chief Executive Officer)
3,323
634
378
50
4,385
J G Best
2,122
506
252
1,575
182
4,637
D L Hodgson (appointed 1 November 2001)
387
109
54
1,061
9
1,620
K H Williams
2,268
571
276
1,053
47
4,215
Total
8,100
1,820
960
3,689
288
14,857
*
Includes pre-tax gains on options exercised in 2001, not previously reflected in remuneration table.
NON-EXECUTIVE DIRECTORS' REMUNERATION
2002
2001
Directors'
Committee
Travel
Directors'
Committee
fees
fees
allowance* Total
fees fees
Total
R P Edey (Chairman)
160
126
41
327
80
110
190
Dr T J Motlatsi (Deputy
Chairman)
117
107
21
245
50
100
150
F B Arisman
83
60
41
184
50
60
110
Mrs E le R Bradley
83
107
190
50
94
144
C B Brayshaw
83
47
130
50
40
90
Dr V K Fung
83
30
20
133
50
36
86
A W Lea
83
28
111
21
21
W A Nairn
83
104
187
31
64
95
J Ogilvie Thompson
83
30
113
50
30
80
N F Oppenheimer
83
30
113
48
30
78
A J Trahar
83
30
113
50
13
63
Total
1,024
699
123
1,846
530
577
1,107
Alternates P G Whitcutt
30
30
6
6
Total
30
30
6
6
Fees paid to former non- executive directors and former alternate directors Dr J W Campbell
29
18
47
D M J Ncube
60**
60
29
40
69
M W King
19
17
36
R P Garnett
17
17
Total
60
60
77
92
169
Grand total
1,024
789
123
1,936
607
675
1,282
*
Introduced with effect from 1 May 2002.
** Prior years' adjustment.
Executive directors have elected not to receive payment of directors' fees and committee fees.
72
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Options to subscribe for ordinary shares in the company granted to, and exercised by, executive directors, executive officers and managers during the year to 31 December 2002, and subsequent to year end, are included in the table below:
Executive
Total Total
RM Godsell
JG Best DL Hodgson KH Williams
Total
officers
Managers
2002
2001
Granted as at 1 January 2002 Number
178,300
74,800
58,000
83,600
394,700
167,200*
2,003,700*
2,565,600
2,977,400
Average exercise price per share - R
108.04
113.30
109.59
104.96
108.61
121.35
123.59
121.14
118.58
Granted during year Number
16,000
10,500
40,500**
10,500
77,500
90,400
1,122,600#
1,290,500
493,000
Average exercise price per share - R
299.50
299.50
195.50
299.50
245.15
247.22
296.95
290.35
121.54
Exercised during year Number
-
11,200
14,800
12,000
38,000
32,000
408,720
478,720
718,000
Average exercise price per share - R
-
104.00
104.00
104.00
104.00
107.54
121.05
118.79
109.92
Average market price per share at date of exercise - R
-
294.18
304.78
283.53
294.94
254.12
269.82
270.76
174.05
Pre-tax gain at date of exercise - R value
-
2,130,000
2,971,504
2,154,400
7,255,904
4,690,576
60,806,607
72,753,087
46,049,078
- Average R per
share
-
190.18
200.78
179.53
190.94
146.58
148.77
151.97
64.13
Lapsed during year Number
-
-
-
-
-
-
39,000
39,000
186,800
Average exercise price per share - R
-
-
-
-
-
-
158.97
158.97
124.40
Held as at 31 December 2002 Number
194,300
74,100
83,700
82,100
434,200
225,600
2,678,580
3,338,380
2,565,600
Average exercise price per share - R
123.80
141.10
152.15
129.98
133.39
173.74
196.12
186.45
121.15
Subsequent to year end Exercised Number
-
-
-
-
-
8,000
68,732
76,732
Average exercise price per share - R
-
-
-
-
-
121.36
121.75
121.71
Average market price per share at date of exercise - R
-
-
-
-
-
272.50
308.96
305.16
Pre-tax gain at date of exercise - R value
-
-
-
-
-
1,209,100
12,867,335
14,076,435
- Average R per
share
-
-
-
-
-
151.14
187.21
183.45
Lapsed Number
-
-
-
-
-
-
44,600
44,600
Average exercise price per share - R
-
-
-
-
-
-
226.96
226.96
Held as at 24 February 2003 Number
194,300
74,100
83,700
82,100
434,200
217,600
2,565,248
3,217,048
Average exercise price per share - R
123.80
141.10
152.15
129.98
133.39
175.67
197.58
187.43
Latest expiry date
2 May 2012 2 May 2012 2 May 2012 2 May 2012
2 May 2012 2 May 2012
Prior year adjustments: *
20,000 options granted at an average price of R114.20 adjusted for category change.
** 30,000 options granted at an average price of R159.10.
16,000 options granted at an average price of R159.10.
#
18,000 options granted at an average price of R160.01.
73
DIRECTORS' REPORT
ANGLO GOLD LIMITED ANNUAL REPORT 2002
The interests of the directors and alternate directors in the ordinary shares of the company at 31 December 2002, which did not individually exceed 1% of the company's issued ordinary share capital, were:
31 December 2002
31 December 2001
Beneficial Non-
Beneficial Non-
Direct
Indirect
beneficial
Direct
Indirect
beneficial
EXECUTIVE DIRECTORS
R M Godsell
460
-
-
460
-
-
K H Williams
-
920
-
-
920
-
Total
460
920
-
460
920
-
NON-EXECUTIVE DIRECTORS
F B Arisman
-
2,000
-
-
2,000*
-
Mrs E le R Bradley
-
28,200
10,000
-
5,200*
11,000
R P Edey
-
1,000
-
-
1,000
-
J Ogilvie Thompson
-
-
478
-
-
478
N F Oppenheimer
-
-
6,426
-
-
9,026
Total
-
31,200
16,904
-
8,200*
20,504
ALTERNATES
A H Calver
-
-
-
46
-
-
P G Whitcutt
-
-
-
46
-
-
Total
-
-
-
92
-
-
Grand total
460
32,120
16,904
552*
9,120*
20,504
*
Restated
There have been no changes in the above interests since 31 December 2002.
74
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Group income statement
for the year ended 31 December 2002
2001
2002
Figures in million
Notes
2002
2001
SA Rands
US Dollars
18,309
19,267
Revenue
3
1,847
2,121
17,590
18,372
Gold income
2, 3
1,761
2,041
(12,973)
(12,550)
Cost of sales
4
(1,203)
(1,519)
4,617
5,822
558
522
(96)
962
Non-hedge derivatives
92
(5)
4,521
6,784
Operating profit*
650
517
(194)
(258)
Corporate administration and other expenses
(25)
(22)
(133)
(179)
Market development costs
(17)
(16)
(228)
(296)
Exploration costs
5
(28)
(26)
225
446
Investment income
6
43
26
(48)
(164)
Other net expenses
7
(16)
(7)
(608)
(464)
Finance costs
8
(44)
(72)
-
(102)
Abnormal item settlement of claim
(10)
-
3,535
5,767
Profit before exceptional items
9
553
400
(259)
(293)
Amortisation of goodwill
15/16
(28)
(29)
(32)
(145)
Loss on disposal of mines
31
(13)
(4)
(11)
2
Other
-
(3)
3,233
5,331
Profit on ordinary activities before taxation
512
364
(983)
(1,730)
Taxation 11
(165)
(111)
2,250
3,601
Profit on ordinary activities after taxation
347
253
(70)
(157)
Minority interest
(15)
(8)
2,180
3,444
Net profit
332
245
* Operating profit excluding unrealised
4,647
6,683
non-hedge derivatives
2
638
527
2,476
3,920
Headline earnings
12
376
281
Headline earnings before unrealised non-hedge
2,536
3,854
derivatives
12
368
286
Earnings per ordinary share (cents)
12
1,017
1,552
Basic
150
114
1,015
1,545
Diluted
149
114
1,156
1,767
Headline
169
131
1,184
1,737
Headline before unrealised non-hedge derivatives
166
133
900
1,350
Dividends declared per ordinary share (cents)
13
146
87
Dividend cover based on headline earnings
1.3
1.3
before unrealised non-hedge derivatives
1.1
1.5
75
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Group balance sheet
at 31 December 2002
ASSETS
Non-current assets
24,606
19,555
Mining assets
14
2,280
2,057
4,652
3,210
Goodwill 15
374
389
151
165
Investments in associates
16
19
13
275
197
Other investments
17
23
23
460
275
AngloGold Environmental Rehabilitation Trust
19
32
38
1,372
549
Derivatives 35
64
115
204
466
Long-term loans
20
55
17
31,720
24,417
2,847
2,652
Current assets
1,534
1,996
Derivatives 35
233
128
1,867
2,190
Trade and other receivables
21
255
156
1,948
1,848
Inventories 22
216
163
109
3
Current portion of long-term loans
20
-
9
2,284
3,544
Cash and cash equivalents
23
413
191
7,742
9,581
1,117
647
39,462
33,998
Total assets
3,964
3,299
EQUITY AND LIABILITIES
13,357
12,375
Shareholders' equity*
1,443
1,117
355
347
Minority interests
40
30
13,712
12,722
1,483
1,147
Non-current liabilities
4,192
7,219
Borrowings 25
842
350
2,573
2,008
Provisions 26
234
215
3,423
3,445
Deferred taxation
27
402
286
1,917
2,028
Derivatives 35
236
160
12,105
14,700
1,714
1,011
Current liabilities
2,984
2,588
Derivatives 35
302
250
2,464
2,145
Trade and other payables
28
250
206
7,619
719
Current portion of borrowings
25
84
637
578
1,124
Taxation
131
48
13,645
6,576
767
1,141
39,462
33,998
Total equity and liabilities
3,964
3,299
*
Shareholders' equity is analysed in the statement of changes in shareholders' equity (see page 77).
2001
2002
Figures in million
Notes
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Group cash flow statement
for the year ended 31 December 2002
Cash flows from operating activities
18,333
19,020
Cash receipts from customers
1,808
2,153
(12,861)
(10,765)
Cash paid to suppliers and employees
(1,050)
(1,480)
5,472
8,255
Cash generated from operations
30
758
673
176
331
Interest received
32
20
(85)
(169)
Environmental contributions and expenditure
(16)
(10)
11
19
Dividends received from associates
16
2
1
(613)
(410)
Finance costs
(40)
(73)
(897)
(1,376)
Mining and normal taxation paid
(131)
(111)
4,064
6,650
Net cash inflow from operating activities
605
500
Cash flows from investing activities Capital expenditure
14
(1,886)
(1,844)
- to expand operations
(176)
(219)
(681)
(998)
- to maintain operations
(95)
(79)
63
11
Proceeds from disposal of mining assets
1
6
878
1,544
Net proceed from disposal of mines
31
140
109
878
1,813
Proceeds
164
109
-
(269)
Contractual obligations
(24)
-
(11)
Associate acquired
16
(1)
(24)
(355)
Investments acquired
(34)
(3)
4
1,829
Proceeds from sale of investments
158
-
-
(979)
Acquisition of shares
31
(97)
-
(37)
(51)
Loans advanced
(5)
(4)
367
175
Repayment of loans advanced
17
43
(1,327)
(668)
Net cash outflow from investing activities
(91)
(148)
Cash flows from financing activities
85
156
Proceeds from issue of share capital
18
7
-
(116)
Share issue expenses
(11)
-
2,381
8,599
Proceeds from borrowings
798
276
(3,567)
(9,789)
Repayment of borrowings
(912)
(414)
(1,447)
(2,821)
Dividends paid
(260)
(167)
(2,548)
(3,971)
Net cash outflow from financing activities
(367)
(298)
189
2,011
Net increase in cash and cash equivalents
147
54
618
(751)
Translation
75
(58)
1,477
2,284
Cash and cash equivalents at beginning of year
191
195
2,284
3,544
Cash and cash equivalents at end of year
23
413
191
2001
2002
Figures in million
Notes
2002
2001
SA Rands
US Dollars
76
77
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Group statement of changes in shareholders' equity
for the year ended 31 December 2002
US Dollars
Balance at 31 December 2000
7
1,043
20
43
-
340
1,453
Effect of adoption of IAS 39
49
(25)
24
Net profit
245 245
Dividends (note 13)
(167) (167)
Ordinary shares issued
22
22
Net gain on cash flow hedges
removed from equity and reported
in income
(1) (1)
Net loss on cash flow hedges
(283)
(283)
Deferred taxation on cash flow
hedges
112
112
Transfer from non-distributable
reserves (1)
1
-
Translation (3)
(388)
(7)
207
35
(132)
(288)
Balance at 31 December 2001
4 677
12
250
(88) 262
1,117
Net profit
332 332
Dividends (note 13)
(251) (251)
Ordinary shares issued
-
140
140
Net loss on cash flow hedges
removed from equity and reported
in income
61
61
Net loss on cash flow hedges
(105)
(105)
Deferred taxation on cash flow
hedges
(29)
(29)
Net gain on available-for-sale
financial assets
7
7
Acquisition of shares
(3)
(3)
Transfer from non-distributable
reserves (1)
1
-
Translation 3
296
5
(207)
(28)
105
174
Balance at 31 December 2002
7 1,113
16
43
(185)
449 1,443
Note 24
24
SA Rands
Balance at 31 December 2000
54
7,897
149
325
2,579
11,004
Effect of adoption of IAS 39
373
(186)
187
Net profit
2,180 2,180
Dividends (note 13)
(1,447) (1,447)
Ordinary shares issued
189
189
Net gain on cash flow hedges
removed from equity and reported
in income
(8)
(8)
Net loss on cash flow hedges
(2,438)
(2,438)
Deferred taxation on cash flow
hedges
968 968
Transfer from non-distributable
reserves (6)
6
-
Translation 2,674
48
2,722
Balance at 31 December 2001
54 8,086
143
2,999
(1,057) 3,132
13,357
Net profit
3,444 3,444
Dividends (note 13)
(2,728) (2,728)
Ordinary shares issued
2
1,465
1,467
Net loss on cash flow hedges
removed from equity and reported
in income
644
644
Net loss on cash flow hedges
(1,102)
(1,102)
Deferred taxation on cash flow
hedges
(304)
(304)
Net gain on available-for-sale
financial assets
60
60
Acquisition of shares
(26)
(26)
Transfer from non-distributable
reserves (5)
5
-
Translation (2,639)
202
(2,437)
Balance at 31 December 2002
56 9,551
138
360
(1,583) 3,853
12,375
Note 24
24
*
Non-distributable reserves comprise a surplus on disposal of company shares of $16m (R141m) and a negative foreign equity
reserve of $ nil (R3m).
** 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.
Ordinary Non-
Foreign
Other
Share-
share Share
distributable currency
comprehensive
Retained
holders'
Figures in million
capital
premium
reserves*
translation
income**
earnings
equity
78
Accounting policies
The financial statements are prepared according to the historical cost accounting convention, as modified by the revaluation of
certain financial instruments to fair value. The group's accounting policies as set out below are consistent in all material respects
with those applied in the previous years. These accounting policies conform with International Accounting Standards (IAS) and
South African Statements of Generally Accepted Accounting Practice.
South African Statement of Generally Accepted Practice AC 133, Financial Instruments: Recognition and Measurement, has been adopted ahead of its effective date.
AngloGold presents its consolidated financial statements in US Dollars. The group's presentation currency is US Dollars since the majority of its sales are in US Dollars. The measurement currency is dependent on where the subsidiary operates.
The following method of translation has been used:
equity items other than net profit at the closing rate on each balance sheet date;
assets and liabilities at the closing rate on each balance sheet date;
income, expenses and cash flows at the average exchange rate; and
resulting exchange differences are included in equity.
To assist investors in South Africa, amounts have also been disclosed in SA Rands. This is supplementary to the information required by IAS. AngloGold the company, presents its results in SA Rands.
BASIS OF CONSOLIDATION
The group financial statements incorporate the financial statements of the company, its subsidiaries and its proportionate interest in joint ventures.
The financial statements of subsidiaries and joint ventures are prepared for the same reporting period as the holding company, using the same accounting policies.
Where an investment in a subsidiary or a joint venture is acquired or disposed of during the financial year, its results are included from, or to the date control became, or ceased to be effective.
All inter-group transactions and balances are eliminated on consolidation. Unearned profits that arise between group entities are eliminated.
FOREIGN ENTITIES
Assets and liabilities (both monetary and non-monetary) of foreign entities are translated at the closing rate. Income statement items are translated at an average rate of exchange for the period. Exchange differences are taken directly to a foreign currency translation reserve.
ACQUISITION AND GOODWILL ARISING THEREON
Where an investment in a subsidiary, joint venture or an associate is made, any excess of the purchase price over the fair value of the attributable mineral reserves and net assets is recognised as goodwill. Goodwill which represents resources is amortised on a systematic basis which recognises the depletion of resources over the lesser of the life of the mine or 20 years.
The unamortised balance is reviewed on a regular basis and, if impairment in the value has occurred, it is written off in the period in which the circumstances are identified.
Goodwill in respect of subsidiaries and proportionately consolidated joint ventures is disclosed as goodwill. Goodwill relating to associates is included within the carrying value of the investment in associates.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate.
JOINT VENTURES
A joint venture is an entity in which the group holds a long-term interest and which is jointly controlled by the group and one or more other venturers under a contractual arrangement. The group's interest in a jointly controlled entity is accounted for by proportionate consolidation.
ASSOCIATES
The equity method of accounting is used for an investment over which the group exercises significant influence and normally owns between 20% and 50% of the voting equity. Associates are equity accounted from the effective dates of acquisition to the effective dates of disposal.
Results of associates are equity accounted from their most recent audited annual financial statements or unaudited interim financial statements. Any losses of associates are brought to account in the consolidated financial statements until the investment in such associates is written down to a nominal amount. Thereafter, losses are accounted for only insofar as the group is committed to providing financial support to such associates.
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
1
Accounting policies (continued)
The carrying values of the investments in associates represent the cost of each investment, including unamortised goodwill, the
share of post-acquisition retained earnings and losses and any other movements in reserves. The carrying value of associates is
reviewed on a regular basis and if any impairment in value has occurred, it is written off in the period in which these
circumstances are identified.
MINING ASSETS
Mining assets are recorded at cost less accumulated amortisation and impairments. Cost includes pre-production expenditure incurred during the development of a mine and the present value of future decommissioning costs. Cost also includes finance charges capitalised during the construction period where such costs are financed by borrowings.
Mine development costs
Capitalised mine development costs include expenditure incurred to develop new orebodies, to define further mineralisation in
existing orebodies and to expand the capacity of a mine. Where funds have been borrowed specifically to finance a project, the
amount of interest capitalised represents the actual borrowing costs incurred.
Mine development costs are amortised using the units-of-production method based on estimated proved and probable mineral reserves. Amortisation is first charged on new mining ventures from the date it is capable of commercial production.
Proved and probable mineral reserves reflect estimated economically recoverable quantities which can be recovered in future from known mineral deposits.
Stripping costs incurred during the production phase to remove additional waste ore are deferred and charged to operating costs on the basis of the average life-of-mine stripping ratio.
The average stripping ratio is calculated as the number of tonnes of waste material removed per tonne of ore mined. The average life of the mine ratio is recalculated annually in the light of additional knowledge and changes in estimates.
The cost of the "excess stripping" is capitalised as mine development costs when the actual stripping ratio exceeds the average life- of-mine stripping ratio. When the actual stripping ratio is below the average life of the mine ratio, sufficient previously capitalised costs are expensed to increase the cost up to the average. Thus, under this method, the cost of stripping in any period will be reflective of the average stripping rates for the orebody as a whole.
Mine infrastructure
Plant, equipment and buildings are amortised using the lesser of their useful life or units-of-production method based on
estimated proved and probable mineral reserves.
Land
Land is not depreciated.
Mineral rights, dumps and ore reserves
Mineral rights are amortised using the units-of-production method based on estimated proved and probable mineral reserves.
Dumps are amortised over the period of treatment.
Ore reserves are measured mining resources which, when proved and probable, are transferred to mine development costs and amortised from the date on which commercial production begins.
If the recoverable amount of any of the above assets is less than the carrying value, an allowance is made for the impairment in value.
Borrowing costs
Interest on borrowings relating to the financing of major capital projects under construction is capitalised during the construction
phase as part of the cost of the project. Other borrowing costs are expensed as incurred.
Leased assets
Assets subject to finance leases are capitalised at cost with the related lease obligation recognised at the same amount. Capitalised
leased assets are depreciated over the shorter of their estimated useful lives and the lease term. Finance lease payments are
allocated, using the effective interest rate method, between the lease finance cost, which is included in interest paid, and the capital
repayment, which reduces the liability to the lessor.
Operating lease rentals are charged against operating profits in a systematic manner related to the period of use of the assets concerned.
79
1
Accounting policies (continued)
Research and exploration expenditure
Research and exploration expenditure is expensed in the year in which it is incurred. When a decision is taken that a mining
property is capable of commercial production, all further pre-production expenditure is capitalised. Capitalisation of pre-
production expenditure ceases when the mining property is capable of commercial production.
Inventories
Inventories are valued at the lower of cost and net realisable value after appropriate allowances for redundant and slow moving
items. Cost is determined on the following bases:
• gold in process is valued at the average total production cost at the relevant stage of production;
• gold on hand is valued on an average total production cost method;
• ore stockpiles are valued at the average moving cost of treating and processing the ore;
• by-products, which include uranium oxide and sulphuric acid are valued on an average total production cost method; and
• consumable stores are valued at average cost.
Provisions
Provisions are recognised when the group has a present obligation, whether legal or constructive, as a result of a past event for
which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Employee benefits
The group operates a defined benefit pension plan and post retirement medical aid benefit plans, and a number of defined
contribution pension plans.
DEFINED BENEFIT PLANS
The cost of providing benefits to the group's defined pension and post-retirement benefit plans are determined using the projected unit credit actuarial valuation method. Actuarial gains and losses arising in the defined benefit plans are recognised as income or expense when the cumulative unrecognised gains or losses for each individual plan exceed the greater of 10% of the defined benefit obligation and 10% of the fair value of plan assets. These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plans. Where the fair value of the plan assets exceeds the present value of the obligation, the resulting net asset is not recognised in respect of South African plans due to requirements under the Surplus Distribution legislation.
DEFINED CONTRIBUTION PLANS
Contributions to defined contribution plans in respect of services during that year are recognised as an expense in that year.
Environmental expenditure
Long-term environmental obligations comprising decommissioning and restoration are based on the group's environmental
management plans, in compliance with the current environmental and regulatory requirements.
DECOMMISSIONING COSTS
The provision for decommissioning represents the cost that will arise from rectifying damage caused before production commenced.
Decommissioning costs are provided for at the present value of the expenditures expected to settle the obligation, using estimated cashflows based on current prices. When this provision gives access to future economic benefits, an asset is recognised and included within mining infrastructure. The unwinding of the decommissioning obligation is included in the income statement. The estimated future costs of decommissioning obligations are regularly reviewed and adjusted as appropriate for new circumstances or changes in law or technology. The estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money.
Gains from the expected disposal of assets are not taken into account when determining the provision.
RESTORATION COSTS
The provision for restoration represents the cost for restoring site damage after the commencement of production. Increases in the provision are charged to the income statement as a cost of production.
Gross restoration costs are estimated at the present value of the expenditures expected to settle the obligation, using estimated cashflows based on current prices. The estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money.
Restoration costs are accrued and expensed over the operating life of each mine using the units-of-production method based on estimated proved and probable mineral reserves. Expenditure on ongoing restoration costs is brought to account when incurred.
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
80
81
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Accounting policies (continued)
ENVIRONMENTAL REHABILITATION TRUST
Annual contributions are made to the AngloGold Environmental Rehabilitation Trust, created in accordance with South African statutory requirements, to fund the estimated cost of rehabilitation during and at the end of the life of a mine. The funds that have been paid into the trust fund plus the growth in the trust fund are shown as an asset on the balance sheet.
The environmental rehabilitation obligations in respect of the non South African operations are not funded through an established trust fund. Bank guarantees and reclamation bonds are provided for some of these liabilities.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be
reliably measured. The following criteria must also be present:
• the sale of mining products is recognised when the significant risks and rewards of ownership of the products are transferred
to the buyer;
•
dividends are recognised when the right to receive payment is established; and
• interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the
period to maturity, when it is determined that such income will accrue to the group.
Deferred taxation
Deferred taxation is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and future taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at current tax rates.
Financial instruments
Financial instruments recognised on the balance sheet include investments, loans receivable, trade and other receivables, cash and
cash equivalents, borrowings, derivatives and trade and other payables.
Financial instruments are initially measured at cost, including transaction costs, when the group becomes a party to their contractual arrangements. The subsequent measurement of financial instruments is dealt with below.
A financial instrument or a portion of a financial instrument will be derecognised and a gain or loss recognised when the company loses the contractual rights or extinguishes the obligation associated with such an instrument.
On derecognition of a financial asset, the difference between the proceeds received or receivable and the carrying amount of the asset is included in income.
On derecognition of a financial liability the difference between the carrying amount of the liability extinguished or transferred to another party and the amount paid for is included in income.
DERIVATIVES
The group enters into derivatives to ensure a degree of price certainty and to guarantee a minimum revenue on a portion of the future planned gold production of its mines.
IAS39 (AC133) requires that derivatives be treated as follows:
• Commodity based ("normal purchase or normal sale") contracts that meet the requirements of IAS39 are recognised in
earnings when they are settled by physical delivery.
• Where the conditions in IAS39 for special hedge accounting are met the derivative is recognised on the balance sheet as either
a derivative asset or derivative liability and recorded at fair value. The group enters into cash flow hedges whereby the effective portion of fair value gains or losses is recognised in equity (other comprehensive income) until the underlying transaction occurs, then the gains or losses are recognised in earnings or included in the initial measurement of the asset or liability. The ineffective portion of fair value gains and losses is reported in earnings in the period to which they relate.
• All other derivatives are subsequently measured at their estimated fair value, with the changes in estimated fair value at each
reporting date being reported in earnings in the period to which it relates.
The estimated fair values of derivatives are determined at discrete points in time based on the relevant market information. These estimates are calculated with reference to the market rates using industry standard valuation techniques.
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
82
Accounting policies (continued)
INVESTMENTS
Listed investments, other than investments in subsidiaries, joint ventures, and associates, are subsequently measured at fair value, which is calculated by reference to the quoted selling price at the close of business on the balance sheet date. Unlisted investments are shown at fair value, or at cost where fair value cannot be reliably measured.
Investments classified as available-for-sale financial assets are subsequently measured at fair value, with changes in fair value recognised in equity (other comprehensive income) in the period in which they arise. These amounts are removed from equity and reported in income when the asset is derecognised or when there is evidence that the asset is impaired.
LONG-TERM LOANS RECEIVABLE
Long-term loans receivable are subsequently measured at amortised cost using the effective interest rate method.
TRADE AND OTHER RECEIVABLES
Trade and other receivables originated by the group are subsequently measured at amortised cost less allowance for doubtful debts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value and are subsequently measured at cost.
IMPAIRMENT OF FINANCIAL ASSETS
At each balance sheet date an assessment is made of whether there is any evidence of impairment of financial assets. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment loss recognised in income for the difference between the recoverable amount and the carrying amount.
FINANCIAL LIABILITIES
Financial liabilities, other than trading financial liabilities and derivatives, are subsequently measured at amortised cost being the original obligation less principal payments and amortisations. Trading financial liabilities and derivatives are subsequently measured at fair value.
2
Segmental information
Based on risks and returns the directors consider that the primary reporting format is by business segment. The directors consider
that there is only one business segment being mining, extraction and production of gold. Therefore the disclosures for the primary
segment have already been given in these financial statements.
The secondary reporting format is by geographical analysis by origin and destination.
Geographical analysis by origin is as follows:
Operating profit
Gold
excluding unrealised
Average number
income
non-hedge derivatives
EBITDA
of employees
2002 2001 2002 2001 2002 2001 2002 2001
US Dollars South Africa
930
1,298
389
341
373
351
46,657
64,881
East & West Africa
329
250
129
87
190
134
2,276
1,627
South America
195
177
84
65
118
98
2,656
2,292
North America
152
161
3
16
59
58
909
854
Australia
155
155
33
18
55
38
599
726
1,761
2,041
638
527
795
679
53,097
70,380
SA Rands South Africa
9,718
11,164
4,102
3,036
3,923
3,118
East & West Africa
3,428
2,171
1,343
758
1,980
1,156
South America
2,032
1,529
878
557
1,234
847
North America
1,581
1,377
17
134
616
491
Australia
1,613
1,349
343
162
579
338
18,372
17,590
6,683
4,647
8,332
5,950
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
83
2
Segmental information (continued)
Gold Gold
production production
(oz 000)
(kg)
2002 2001 2002 2001
South Africa
3,412
4,670
106,106
145,247
East & West Africa
1,085
868
33,754
26,992
South America
478
441
14,854
13,709
North America
462
496
14,371
15,436
Australia
502
508
15,626
15,819
5,939
6,983
184,711
217,203
Net operating assets
Total assets
Capital expenditure
2002 2001 2002 2001 2002 2001
US Dollars (m) South Africa
1,012
858
1,663
1,283
112
106
East & West Africa
433
448
777
721
27
34
South America
435
302
579
465
27
23
North America
403
338
438
381
74
93
Australia
239
202
507
449
31
42
2,522
2,148
3,964
3,299
271
298
SA Rands (m) South Africa
8,681
10,260
14,262
15,349
1,168
915
East & West Africa
3,709
5,353
6,661
8,624
287
287
South America
3,732
3,619
4,965
5,562
283
201
North America
3,461
4,044
3,756
4,557
776
800
Australia
2,047
2,418
4,354
5,370
328
364
21,630
25,694
33,998
39,462
2,842
2,567
Geographical analysis by destination is as follows:
Gold income
US Dollars (m)
SA Rands (m)
2002 2001 2002 2001
South Africa
601
31
6,269
270
North America
144
1,225
1,505
10,562
Australia
145
180
1,508
1,547
Europe
437
410
4,560
3,531
United Kingdom
434
195
4,530
1,680
1,761
2,041
18,372
17,590
84
3
Revenue Revenues consists of the following principal categories:
17,590
18,372
Gold income (note 2)
1,761
2,041
543
522
Sale of uranium, silver and sulphuric acid
50
60
176
373
Interest receivable (note 6)
36
20
18,309
19,267
1,847
2,121
4
Cost of sales
10,454
9,812
Cash operating costs
939
1,226
240
291
Other cash costs
28
29
10,694
10,103
Total cash costs
967
1,255
185
30
Retrenchment costs (note 10)
3
22
123
119
Rehabilitation and other non-cash costs
12
13
11,002
10,252
Production costs
982
1,290
1,884
2,566
Amortisation of mining assets (notes 9, 14 and 30)
245
220
12,886
12,818
Total production costs
1,227
1,510
87
(268)
Inventory change
(24)
9
12,973
12,550
1,203
1,519
5 Exploration costs
382
532
Expenditure incurred during the year
51
44
(154)
(236)
Expenditure transferred to mining assets
(23)
(18)
228
296
28
26
6 Investment income
Investment income consists of the following principal categories:
176
373
Interest receivable (notes 3 and 30)
36
20
7
37
Profit from associates after taxation (notes 16 and 30)
4
1
Growth in AngloGold Environmental Rehabilitation
42
36
Trust (notes 19 and 30)
3
5
225
446
43
26
7
Other net expenses Other net expenses consist of the following principal categories:
(16)
(45)
Foreign exchange loss on transactions other than sales
(4)
(2)
(10)
(30)
Loss on disposal of assets (note 30)
(3)
(2)
-
(49)
Post-retirement medical expenses for disposed mines
(5)
-
(26)
(124)
(12)
(4)
Unwinding of decommissioning obligation
(22)
(40)
(notes 26 and 30)
(4)
(3)
(48)
(164)
(16)
(7)
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
85
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
8 Finance costs
606
377
Interest paid on bank loans and overdrafts
36
72
7
-
Interest paid on debentures
1
-
87
Other
8
-
613
464
Total interest
44
73
(5)
-
Less: amounts capitalised
-
(1)
608
464
(Note 30)
44
72
9
Profit before exceptional items is arrived at after taking account of: Auditors' remuneration
8
10
Audit fees
1
1
1
-
Under provision prior year
-
-
2
2
Other services*
-
-
11
12
1
1
Amortisation of mining assets (notes 4, 14 and 30)
1,857
2,526
Owned assets
241
217
27
40
Leased assets
4
3
1,884
2,566 245
220
38
46
Grants for educational and community development
4
4
33
47
Operating lease charges
5
4
* Other services include IT Security reviews and
acting as reporting accountants
10 Employee benefits
Employee benefits including executive directors
4,663
4,110
Salaries, wages and other benefits
392
538
Health care and medical scheme costs
229
241
- current medical expenses
23
27
55
52
- post-retirement medical expenses
5
5
300
210
Defined contribution pension plans expense
20
35
185
30
Retrenchment costs (note 4)
3
22
5,432
4,643
Employee benefits included in cost of sales
443
627
Actuarial defined benefit plan expense analysis
Defined benefit pension plan expense
35
40
- current service cost
4
4
84
99
- interest cost
9
10
(91)
(87)
- expected return on plan assets
(8)
(11)
20
(9)
- actuarial (gain) loss
(1)
2
Defined benefit post-retirement medical expense
6
10
- current service cost
1
1
98
72
- interest cost
7
11
-
(3)
- actuarial gain
-
-
-
(153)
- curtailment
(15)
-
152
(31)
(3)
17
Actual return on plan assets
91
6
Defined benefit pension plan
1
11
Refer to directors' report for details of directors' emoluments
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
86
11 Taxation
Current taxation
375
373
Mining taxation
32
41
509
832
Non-mining taxation
83
55
-
41
Under provision prior year
3
-
66
68
Secondary tax on companies
6
7
Exceptional items (note 12)
-
688
- recoupments tax on Free State disposal (note 31)
63
-
-
(78)
- mining tax on Free State operating loss
(10)
-
950
1,924
177
103
Deferred taxation
105
341
Current
34
13
(66)
35
Unrealised non-hedge derivatives (note 12)
4
(5)
Exceptional items
(6)
-
- debt written off (note 12)
-
-
-
(570)
- disposal of Free State operations (note 12)
(50)
-
33
(194)
(Note 27)
(12)
8
983
1,730 165
111
At 31 December 2001 there was unredeemed capital expenditure estimated at $298m, R3,564m which was available for set-off against future taxable income from the mining operations of Joel mine. Joel mine was sold with effect from 1 January 2002, resulting in the unredeemed capital expenditure not being utilised.
The unutilised tax losses of the North American operations which are available for offset against future profits earned in the USA, amount to $182m, R1,561m (2001: $177m, R2,115m).
The unutilised tax losses of the South American operations which are available for offset against future profits earned in these countries, amount to $86m, R738m (2001: $49m, R583m).
Analysis of tax losses
71
Assessed losses utilised during the year
8
Utilised tax losses remaining to be used against future profits can be split into the following periods:
34
Utilisation required within one year
4
105
Utilisation required within one and two years
12
96
Utilisation required within two and five years
11
2,064
Utilisation in excess of five years
241
2,299
268
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
87
11 Taxation (continued)
Tax reconciliation A reconciliation of the marginal South African tax rate compared with that charged in the income statement is set out in the following table:
Marginal tax rate
46
46
Disallowable expenditure
4
5
Goodwill amortised
2
2
Taxable non-mining income
(3)
(3)
Amortisation and inventory change
7
12
Mining capital allowances
(11)
(10)
Mining tax formula adjustment
2
(1)
Dividends received
(5)
(7)
Foreign income tax allowances
(14)
(7)
Other
4
(7)
Effective tax rate
32
30
2001 2002
2002
2001
SA cents per share
US cents per share
12 Earnings per ordinary share
1,017
1,552
Basic 150
114
The calculation of basic earnings per ordinary share is based on net profit of $332m, R3,444m (2001: $245m, R2,180m) and 221,883,567 (2001: 214,278,892) shares being the weighted average number of ordinary shares in issue during the financial year.
1,156
1,767
Headline
169
131
Headline earnings removes items of a capital nature from the calculation of earnings per share.
The calculation of headline earnings per ordinary share is based on headline earnings of $376m, R3,920m (2001: $281m, R2,476m) and 221,883,567 (2001: 214,278,892) shares being the weighted average number of ordinary shares in issue during the year.
Headline earnings before unrealised non-hedge
1,184
1,737
derivatives. 166
133
This calculation is based on headline earnings before unrealised non-hedge derivatives of $368m, R3,854m (2001: $286m, R2,536m) and 221,883,567 (2001: 214,278,892) shares being the weighted average number of ordinary shares in issue during the financial year.
1,015
1,545
Diluted
149
114
The calculation of diluted earnings per ordinary share is based on net profit of $332m, R3,444m (2001: $245m, R2,180m) and 222,899,926 (2001: 214,715,806) shares being the diluted number of ordinary shares.
Figures in million
2002
2001
%
88
12 Earnings per ordinary share (continued)
The net profit has been adjusted by the following to arrive at headline and headline earnings before unrealised non-hedge derivatives:
2,180
3,444
Net profit
332
245
259
293
Amortisation of goodwill (notes 15, 16 and 30)
28
29
32
145
Loss on disposal of mines
13
4
Current and deferred taxation on exceptional items
-
40
disposal of Free State operations (note 11)
3
-
(6)
-
Deferred taxation on debt written off (note 11)
-
-
Other comprises the following:
54
(2)
Termination of retirement benefit plans
-
5
21
-
Debt written off
-
3
3
-
Impairment of mining assets
-
1
(67)
-
Reversal of impairment on investments
-
(6)
2,476
3,920
Headline earnings
376
281
126
(101)
Unrealised (gain) loss on non-hedge derivatives
(12)
10
(66)
35
Deferred tax on unrealised non-hedge derivatives (note 11)
4
(5)
Headline earnings before unrealised non-hedge
2,536
3,854
derivatives
368
286
The weighted average number of shares has been adjusted by the following to arrive at the diluted number of ordinary shares:
Weighted average number of shares
221,883,567
214,278,892
Dilutive potential of share options
1,016,359
436,914
Diluted number of ordinary shares
222,899,926
214,715,806
At a general meeting held on 5 December 2002, a share split was approved by way of a special resolution. AngloGold's ordinary shares of 50 cents each were sub-divided into ordinary shares of 25 cents each, with effect from the close of business on 24 December 2002. Throughout the annual financial statements presented herein, the number of shares and the calculation of earnings per ordinary share have been changed to retroactively reflect this change in the number of shares.
13 Dividends
Ordinary shares No. 91 of 550 SA cents per ordinary share declared on 30 January 2002 and paid on 4 March 2002
696
1,223
(49 US cents per share).
109
86
No. 92 of 675 SA cents per ordinary share declared on 30 July 2002 and paid on 30 August 2002
751
1,505
(64 US cents per share).
142
81
1,447
2,728
251
167
No. 93 of 675 SA cents per ordinary share was declared on 30 January 2003 and paid on 28 February 2003 (82 US cents per share).
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
89
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Mineral
Mine
Mine
rights,
development
infra-
dumps and
Figures in million
costs
structure
ore reserves
Land
Total
14. Mining assets
US Dollars Cost Balance at beginning of year
1,863
1,185
250
14
3,312
Additions - Expand operations
108
60
8
-
176
- Maintain operations
57
38
-
-
95
Acquisition and disposals (note 31)
(346)
(28)
29
-
(345)
Transfers and other movements
10
(4)
(3)
-
3
Translation 354
128
17
1
500
Balance at end of year
2,046
1,379
301
15
3,741
Accumulated amortisation Balance at beginning of year
638
594
23
-
1,255
Amortisation charge for the year (notes 4, 9 and 30)
118
103
24
-
245
Disposal (note 31)
(160)
(67)
(1)
-
(228)
Transfers and other movements
2
(10)
(3)
-
(11)
Translation 117
80
3
200
Balance at end of year
715
700
46
-
1,461
Net book value at 31 December 2001
1,225
591
227
14
2,057
Net book value at 31 December 2002
1,331
679
255
15
2,280
SA Rands Cost Balance at beginning of year
22,282
14,180
2,997
156
39,615
Additions - Expand operations
1,136
631
77
-
1,844
- Maintain operations
599
396
-
3
998
Acquisition and disposals (note 31)
(3,822)
(375)
283
1
(3,913)
Transfers and other movements
107
(47)
(22)
(3)
35
Translation (2,798)
(2,956)
(705)
(33)
(6,492)
Balance at end of year
17,504
11,829
2,630
124
32,087
Accumulated amortisation Balance at beginning of year
7,630
7,090
289
-
15,009
Amortisation charge for the year (notes 4, 9 and 30)
1,235
1,077
254
-
2,566
Disposal (note 31)
(1,761)
(739)
(5)
-
(2,505)
Transfers and other movements
17
(101)
(40)
-
(124)
Translation (990)
(1,326)
(98)
-
(2,414)
Balance at end of year
6,131
6,001
400
-
12,532
Net book value at 31 December 2001
14,652
7,090
2,708
156
24,606
Net book value at 31 December 2002
11,373
5,828
2,230
124
19,555
Mining assets with a carrying value of $254m, R2,180m (2001: $304m, R3,640m) are encumbered by project finance (note 25).
90
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
15 Goodwill
Cost
3,600
5,726
Balance at beginning of year
479
475
258
-
Fair value adjustment (note 32)
-
30
(76)
-
Transfer
-
(9)
1,944
(1,485)
Translation
15
(17)
5,726
4,241
Balance at end of year
494
479
Accumulated amortisation
544
1,074
Balance at beginning of year
90
72
255
289
Amortisation (notes 12 and 30)
28
29
(76)
-
Transfer -
(9)
351
(332)
Translation
2
(2)
1,074
1,031
Balance at end of year
120
90
4,652
3,210
Net book value
374
389
16 Investments in associates
The group has the following associated undertakings: A 53.03% (2001: 48.48%) interest in Rand Refinery Limited, which is involved in the refining of bullion and by-products which are sourced inter alia from South Africa and foreign gold producing mining companies. This investment is equity accounted as AngloGold only has significant influence and not control over the financial and operating policies of this company. The year end of Rand Refinery Limited is 30 September. Equity accounting is based on the results for the twelve months ended 30 September 2002.
A 25.0% (2001: 25.0%) interest in Oro Group (Proprietary) Limited which is involved in the manufacture and wholesale of jewellery. The year end of Oro Group (Proprietary) Limited is 31 March. Equity accounting is based on the results for the twelve months ended 30 September 2002.
Carrying value of associates consists of:
73
84
Unlisted shares at cost
10
6
75
67
Share of retained earnings brought forward
6
9
7
37
Profit after taxation (notes 6 and 30)
4
1
11
-
Acquisition
-
1
(11)
(19)
Dividends
(2)
(1)
(4)
(4)
Amortisation of goodwill (note 12)
-
-
-
-
Translation
1
(3)
151
165
Carrying value
19
13
151
165
Directors' valuation of unlisted associates
19
13
The group's effective share of certain balance sheet items of its associates is as follows:
85
88
Non-current assets
10
7
102
145
Current assets
17
9
187
233
Total assets
27
16
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
91
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
16 Investments in associates (continued)
34
32
Non-current liabilities
4
3
43
73
Current liabilities
8
4
77
105
Total equity and liabilities
12
7
110
128
Net assets
15
9
Reconciliation of the carrying value of investments in associates with net assets:
110
128
Net assets
15
9
41
37
Goodwill
4
4
151
165
Carrying value
19
13
17 Other investments
Listed investments
3
131
Balance at beginning of year
11
-
124
1,757
Additions
152
14
(3)
(1,824)
Disposals
(158)
-
-
60
Fair value adjustments
7
-
7
(14)
Translation
1
(3)
131
110
Balance at end of year
13
11
131
110
Market value of listed investments
13
11
Unlisted investments
52
75
Balance at beginning of year
6
7
4
1
Additions
-
-
(1)
(15)
Disposals
(1)
-
-
(1)
Fair value adjustment
-
-
20
(23)
Translation
(1)
(1)
75
37
Balance at end of year
4
6
75
37
Directors' valuation of unlisted investments
4
6
Investment properties
-
69
Balance at beginning of year
6
-
67
-
Impairment reversal per income statement
-
6
2
(19)
Translation
-
-
69
50
Balance at end of year
6
6
69
50
Directors' valuation of investment properties
6
6
275
197
Total other investments
23
23
275
197
Total valuation (note 35)
23
23
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
92
18 Interest in joint ventures
The group's effective share of income, expenses, assets, liabilities and cash flows of joint ventures, which are included in the consolidated financial statements, are as follows:
Income statement
2,350
3,271
Gold income
312
273
(1,435)
(2,149)
Cost of sales
(205)
(166)
915
1,122
Operating profit
107
107
(37)
-
Other net expense
-
(5)
17
10
Investment income
1
2
(176)
(94)
Finance costs
(9)
(20)
719
1,038
Profit on ordinary activities before taxation
99
84
Balance sheet
6,343
4,332
Non-current assets
505
530
1,674
1,201
Current assets
140
140
8,017
5,533
Total assets
645
670
5,732
3,946
Shareholders' equity
460
479
45
-
Minority interests
-
4
Non-current liabilities
1,281
746
Interest-bearing borrowings
87
107
67
60
Provisions
7
6
Current liabilities
478
172
Interest-bearing borrowings
20
40
414
609
Other
71
34
8,017
5,533
Total equity and liabilities
645
670
Cash flow statement
(2,248)
1,573
Cash flows from operating activities
150
(261)
(339)
(178)
Cash flows from investing activities
(17)
(39)
2,704
(1,258)
Cash flows from financing activities
(120)
314
117
137
Net increase in cash and cash equivalents
13
14
19 AngloGold Environmental Rehabilitation
Trust
358
460
Balance at beginning of year
38
47
85
32
Contributions
3
10
-
197
Additional contribution Free State disposal
19
-
Growth in AngloGold Environmental
42
36
Rehabilitation Trust (notes 6 and 30)
3
5
-
(253)
Funds transferred in respect of Free State disposal (note 31)
(23)
-
Additional funds transferred to Free State
-
(197)
Environmental Trust Fund
(19)
-
(25)
-
Expenditure incurred
-
(3)
-
-
Translation
11
(21)
460
275
Balance at end of year
32
38
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
93
20 Long-term loans
Unsecured
263
115
Loans to joint venture partners
13
22
Deferred purchase consideration in respect of the sale
-
326
of the Free State assets
38
-
50
28
Other
4
4
313
469
55
26
Less: Current portion of long-term loans included
109
3
in current assets
-
9
204
466
Total long-term loans (note 35)
55
17
21 Trade and other receivables
537
411
Trade debtors
48
45
587
484
Prepayments and accrued income
56
49
262
220
Value added taxation
26
22
-
688
Receivable in respect of the sale of the Free State assets
80
-
481
387
Other debtors
45
40
1,867
2,190
(Note 35)
255
156
22 Inventories
At cost
918
983
Gold in process
115
77
34
23
Gold on hand
3
3
224
228
Ore stockpiles
26
19
174
111
By-products
13
14
1,350
1,345
Total metal inventories
157
113
598
503
Consumable stores at average cost
59
50
1,948
1,848
216
163
23 Cash and cash equivalents
2,284
2,900
Cash and deposits on call
338
191
-
644
Money market instruments
75
-
2,284
3,544
(Note 35)
413
191
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
94
24 Share capital and premium
Share capital Authorised 400,000,000 ordinary shares of 25 SA cents each (2001: 200,000,000 ordinary shares of 50 SA cents each. After sub-division 400,000,000 ordinary shares of
100
100
25 SA cents each)
7
8
2,000,000 A redeemable preference shares of - -
1
1
50 SA cents each
5,000,000 B redeemable preference shares of - -
- -
1 SA cent each
101
101
7
8
Issued 222,622,022 ordinary shares of 25 SA cents each (2001: 107,634,058 ordinary shares of 50 SA cents each.
54
56
After sub-division 215,268,116 shares of 25 SA cents each)
7
4
2,000,000 A redeemable preference shares of - -
1
1
50 SA cents each
778,896 B redeemable preference shares of - -
-
-
1 SA cent each
55
57
7
4
Less: A redeemable preference shares held within
(1)
(1)
the group - -
54
56
7
4
Share premium
8,398
9,863
Total share premium
1,166
730
(312)
(312)
Less: Held within the group
(53)
(53)
8,086
9,551
1,113
677
8,140
9,607
Share capital and premium
1,120
681
At a general meeting held on 5 December 2002, a share split was approved by way of a special resolution. AngloGold's ordinary shares of 50 cents each were sub-divided into ordinary shares of 25 cents each, with effect from the close of business on 24 December 2002.
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
95
25 Borrowings
Unsecured
-
4,028
Syndicated loan facility ($600m)
470
-
Interest charged at libor plus 0.7% per annum. Loan is repayable in February 2005 and is US dollar-based.
2,585
2,264
Syndicated loan facility ($400m)
264
216
Interest charged at libor plus 0.75% per annum. Loan is repayable in May 2004 and is US dollar-based.
-
87
Banco Europeu para a Amrica Latina-Brussels
10
-
Interest charged at libor plus 1.75% per annum. Loan is repayable in monthly instalments commencing March 2004 and terminating in September 2004 and is US dollar-based.
-
72
Syndicated loan facility
9
-
Interest charged at Bank Bill Swop Reference Rate plus 0,35% per annum. Loan is repayable by September 2003 and is Australian dollar-based.
91
65
Santander Bank
8
8
Interest charged at libor plus 1.5% per annum. Loan is repayable in June and July 2003 and is US dollar-based.
73
52
Itau Bank
6
6
Interest charged at libor plus 1.5% per annum. Loan is repayable by September 2003 and is US dollar-based.
60
43
HSBC Bamerindus
5
5
Interest charged at libor plus 1.3% per annum. Loan is repayable in May 2003 and is US dollar-based.
69
19
RMB International (Dublin) Limited
2
6
Interest charged at libor plus 0.82% per annum. Loan is of a short-term nature and no dates of repayment are fixed and is US dollar-based.
30
19
Government of Mali
2
3
Interest charged at libor plus 2% per annum. Loans are repayable in half-yearly instalments terminating in March 2006 and are US dollar-based.
4,250
-
Syndicated loan facility
-
355
1,450
-
Credit Agricole
-
121
443
-
Loans from Anmercosa Finance Limited
-
37
244
-
Syndicated loan facility
-
20
129
-
Citibank NA
-
11
121
-
Bank Boston
-
10
61
-
Deutsche Bank
-
5
36
-
Dresdner Bank Luxembourg SA
-
3
24
-
Banco do Brasil
-
2
7
-
Economic Development Corporation Limited
-
1
200
-
Local money market short-term borrowings
-
17
9,873
6,649
Total unsecured borrowings
776
826
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
96
25 Borrowings (continued)
Secured
743
441
Geita Syndicated Project finance
51
62
Interest charged at libor plus 1.7% per annum. Loan is repayable half-yearly until 2007 and is US dollar-based.
579
464
Cerro Vanguardia Syndicated Project finance
54
48
Interest charged at libor plus 1.75% per annum. Loan is repayable in half-yearly instalments terminating in December 2004 and is US dollar-based.
315
125
Morila Syndicated Project finance
15
26
Interest charged at libor plus 2% per annum. Loan is repayable in half-yearly instalments terminating in December 2005 and is US dollar-based.
79
152
Senstar Capital Corporation
18
7
Interest charged at an average rate of 7.01% per annum. Loans are repayable in monthly instalments terminating in November 2009 and are US dollar-based.
99
65
Rolls Royce
8
8
Interest is index linked. Loan is repayable in monthly instalments terminating in December 2010 and is US dollar-based.
51
29
Investec
3
4
Interest charged at 6.5% per annum. Loan is repayable in half-yearly instalments terminating in June 2006 and is US dollar-based.
-
12
Kudu Finance Company
1
-
Interest charged at libor plus 2% per annum. Loan is repayable in monthly instalments terminating in December 2010 and is US dollar-based.
-
1
Mineral Laboratories of Australia (Pty) Limited
-
-
Interest charged at libor plus 2% per annum. Loan is repayable in monthly instalments terminating in August 2003 and is US dollar-based.
72
-
Sadiola Project Finance
-
6
11,811
7,938
Total borrowings (note 35)
926
987
Less: Current portion of borrowings included in current
7,619
719
liabilities
84
637
4,192
7,219
Total long-term borrowings
842
350
Amounts falling due
7,619
719
Within one year
84
637
638
2,788
Between one and two years
325
53
3,390
4,355
Between two and five years
508
283
164
76
After five years
9
14
11,811
7,938
(Note 35)
926
987
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
97
25 Borrowings (continued)
Currency The currencies in which the borrowings are denominated are as follows:
305
72
Australian dollars
9
25
200
-
SA Rands
-
17
11,306
7,866
US Dollars
917
945
11,811
7,938
926
987
Undrawn Facilities Undrawn borrowing facilities as at 31 December 2002 are as follows:
2,213
1,184
Syndicated loan ($400m) US Dollar
138
185
-
1,158
Syndicated loan ($600m) US Dollar
135
-
Australia and New Zealand Banking Group Limited
-
168
Australian dollar
20
-
609
-
Syndicated loan Australian dollar
-
51
1,767
-
Deutsche Bank Australian dollar
-
148
4,589
2,510 293
384
Morila and Geita Project Finance Secured by a fixed and floating charge over the project assets (note 14), the hedging contracts and a pledge over the shares in the project company.
Cerro Vanguardia Project Finance Secured by a fixed and floating charge over the project assets (note 14), the major project contracts and a pledge over the shares in the project company.
Investec Loan is guaranteed by AngloGold Limited.
The equipment financed by the other secured loans is used as security for those loans.
26 Provisions
Post-retirement medical funding
773
743
Balance at beginning of year
62
102
(22)
(34)
Disposal (note 31)
(3)
(4)
55
52
Charge to income statement
5
5
(67)
(52)
Less: Utilised during the year
(5)
(5)
4
(9)
Translation
23
(36)
743
700
Balance at end of year
82
62
The provision for post-retirement medical funding represents the provision for health care benefits for employees and retired employees and their registered dependants.
The post-retirement benefit costs are assessed in accordance with the advice of independent professionally qualified actuaries. The actuarial method used is the projected unit credit funding method.
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
98
26 Provisions (continued)
The assumptions used in calculating the defined benefit post-retirement medical obligation is as follows:
%
%
Discount rate
11.5
11.0
Expected increase in healthcare costs
9.2
10.0
Short-term rates ranged from 6.5% to 9.2% and long-term after 3 years at 5%.
The normal retirement age is 60 years, and fully eligible age is 55 years.
The last valuation was performed as at 31 December 2002.
Environmental rehabilitation obligations Provision for decommissioning
401
529
Balance at beginning of year
44
53
(37)
(112)
Acquisition and disposals (note 31)
(10)
(4)
82
10
Change in estimates
1
10
22
40
Unwinding of decommissioning obligation (notes 7 and 30)
4
3
61
(62)
Translation
8
(18)
529
405
Balance at end of year
47
44
Provision for restoration
855
1,078
Balance at beginning of year
90
112
(17)
(179)
Acquisition and disposals (note 31)
(16)
(2)
95
157
Charge to income statement
15
11
-
10
Change in estimates
1
-
(164)
(42)
Less: Utilised during the year
(4)
(19)
309
(224)
Translation
7
(12)
1,078
800
Balance at end of year
93
90
Other provisions
119
223
Balance at beginning of year
19
16
43
10
Charge to income statement
1
5
(21)
(69)
Less: Utilised during the year
(8)
(2)
82
(61)
Translation
-
-
223
103
Balance at end of year
12
19
2,573
2,008
Total provisions
234
215
Other provisions include civil claims and medical costs arising from former employees, and retirement benefit provisions referred to in note 29.
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
99
27 Deferred taxation
Deferred taxation relating to temporary differences is made up as follows: Deferred taxation liabilities
4,857
4,369
Mining assets
509
406
133
113
Inventories
13
11
-
66
Other
8
-
4,990
4,548
530
417
Deferred taxation assets
598
589
Provisions
68
50
969
507
Derivatives
59
81
-
7
Other
1
-
1,567
1,103
128
131
3,423
3,445
Net deferred taxation
402
286
The movement on the deferred tax balance is as follows:
4,187
3,423
Balance at beginning of year
286
553
292
-
Fair value adjustment (note 32)
-
34
33
(194)
Income statement charge (note 11)
(12)
8
(1,064)
415
Taxation of other comprehensive income
40
(102)
179
-
Effect of adoption of IAS 39
-
25
(500)
(40)
Acquisition and disposals (note 31)
(4)
(63)
296
(159)
Translation
92
(169)
3,423
3,445
Balance at end of year
402
286
28 Trade and other payables
1,166
698
Trade creditors
81
97
542
665
Accruals
78
45
756
782
Other creditors
91
64
2,464
2,145
(Note 35)
250
206
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
100
29 Retirement benefits
South Africa region The group has made provision for pension and provident schemes covering substantially all employees. Eligible employees are members of either AngloGold's defined benefit fund or one of the industry-based defined contribution funds.
There is one defined benefit scheme and three defined contribution schemes. The assets of these schemes are held in administered trust funds separated from the group's assets. Scheme assets primarily consist of listed shares, property trust units and fixed income securities.
Defined benefit pension fund
842
797
Fair value of fund assets
93
70
836
855
Present value of fund obligation
100
70
6
(58)
Plan (liability) asset
(7)
-
(6)
58
Unrecognised actuarial loss (gain)
7
-
-
-
Amount recognised in balance sheet
-
-
842
797
Market value of plan assets
93
70
The assumptions used in calculating the above defined benefit pension plan obligation are as follows:
%
%
Discount rate
11.5
10.5
Pension increase
6.1
6.5
Rate of compensation increase
7.8
7.5
Expected return on plan assets
11.5
10.5
A statutory valuation of the defined benefit pension fund was performed as at 31 December 2002, and the Pension Fund was certified by the reporting actuaries as being in a sound financial position, subject to the deficit being funded through increased contributions as advised by the actuaries. In arriving at their conclusions, the actuaries took into account reasonable long-term estimates of inflation, increases in wages, salaries and pension as well as returns on investments. Calculations for the Pension Funds financial position are carried out in years when a statutory valuation is not performed.
Contributions to the various defined contribution retirement schemes are fully expensed during the year in which they are funded and the cost of providing retirement benefits for the year amounted to $17m, R183m (2001: $31m, R263m).
All funds are governed by the Pension Funds Act of 1956 as amended.
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
101
29 Retirement benefits (continued)
Namibia (Navachab)
Navachab employees are members of a defined contribution provident fund. The fund is administered by the Old Mutual insurance company. Both the company and the employees make contributions to this fund. AngloGold seconded employees at Navachab remain members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold.
The Malian operations do not have retirement schemes for employees. All employees (local and expatriate) contribute towards the Government social security fund, and the company also makes a contribution towards this fund. On retirement, Malian employees are entitled to a retirement benefit from the Malian Government. Expatriate employees are reimbursed only their contributions to the social security fund. AngloGold seconded employees in Mali remain members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold.
Geita does not have a retirement scheme for employees. Tanzanian nationals contribute towards the Government social security fund, and the company also makes a contribution towards this fund. On retirement, employees are entitled to a retirement benefit from the Tanzanian Government. The company makes no contribution towards any retirement schemes for contracted expatriate employees. AngloGold seconded employees in Tanzania remain members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold.
The region contributes to the Australian Retirement Fund for the provision of benefits to employees and their dependants on retirement, disability, death, resignation or retrenchment. The fund is a multi-industry national fund with defined contribution arrangements. Contribution rates by the operation on behalf of employees varies, with minimum contributions meeting compliance requirements under the Superannuation Guarantee legislation. Members also have the option of contributing to approved personal superannuation funds. The contributions by the operation are legally enforceable to the extent required by the Superannuation Guarantee legislation and relevant employment agreements.
The AngloGold North America Inc. Retirement Plan and the AngloGold North America Inc. Retiree Medical Plan were incorporated during 1999 with the purchase of the Minorco assets.
102
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
29 Retirement benefits (continued)
The AngloGold South America region operates a number of defined contribution arrangements for their employees. These arrangements are funded by the operations (basic plan) and operations/employees (optional supplementary plan) and are embodied in a pension plan entity, Fundambrs Sociedade de Previdncia Privada, which is responsible for administering the funds and making arrangements to pay the benefits. On conversion of the defined benefit fund to the defined contribution fund on 30 November 1998, an actuarial liability in the amount of $6m, R51m was calculated. This liability is annually revised by the Mercer, the plans actuary, and provided for under other provisions which as at 31 December 2002 amounted to $3m, R36m.
30 Cash generated from operations
3,233
5,331
Profit on ordinary activities before taxation
512
364
Adjusted for:
324
(197)
Non-cash movements
(19)
31
1,884
2,566
Amortisation of mining assets (notes 4, 9 and 14)
245
220
(176)
(373)
Interest receivable (note 6)
(36)
(20)
(7)
(37)
Profit from associates after taxation (notes 6 and 16)
(4)
(1)
Growth in AngloGold Environmental Rehabilitation
(42)
(36)
Trust (notes 6 and 19)
(3)
(5)
10
30
Loss on disposal of assets (note 7)
3
2
22
40
Unwinding of decommissioning obligation (notes 7 and 26)
4
3
7
Other provisions
1
-
608
464
Finance costs (note 8)
44
72
(53)
(132)
Movement on non-hedge derivatives
(16)
(12)
259
293
Amortisation of goodwill (notes 12, 15 and 16)
28
29
21
-
Debt written off
-
3
3
-
Impairment of mining assets
-
1
(67)
-
Reversal of impairments on investments
-
(6)
32
92
Loss on disposal of mines
8
4
54
(2)
Termination of retirement benefit plans
-
5
(633)
209
Movements in working capital
(9)
(17)
5,472
8,255
758
673
Movements in working capital:
(193)
488
(Increase) decrease in trade and other receivables
(5)
65
(551)
85
(Increase) decrease in inventories
(54)
22
111
(364)
Increase (decrease) in trade and other payables
50
(104)
(633)
209
(9)
(17)
103
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
31 Acquisitions and disposals
Acquisitions and disposals can be summarised as follows:
1,245
1,408
Mining assets (note 14)
117
156
-
253
Environmental Trust Fund (note 19)
23
-
-
130
Trade and other receivables
11
-
55
2
Inventories
-
7
-
(81)
Cash and cash equivalents
(8)
-
-
40
Minority interests
4
-
-
384
Borrowings
38
-
(76)
(325)
Provisions (note 26)
(29)
(10)
(500)
(40)
Deferred taxation (note 27)
(4)
(63)
(36)
(163)
Trade and other payables
(15)
(5)
688
1,608
Carrying value
137
85
(32)
(145)
Loss on disposal of mines
(13)
(4)
656
1,463
Net sale (purchase) consideration
124
81
222
(688)
Recoupments taxation (note 11)
(63)
28
-
(291)
Deferred sale consideration
(26)
-
-
81
Cash and cash equivalents
8
-
878
565
Net cash flow on disposal (acquisition)
43
109
Net cash flow on disposal (acquisition) can be
878
565
summarised as follows:
43
109
-
(979)
Purchase of additional interest in Cerro Vanguardia
(97)
-
-
1,544
Sales consideration for Free State assets and Stone & Allied
140
-
878
-
Sale of Elandsrand, Deelkraal and Vaal River shaft No 2
-
109
Acquisition comprises the following:
Cerro
Cerro
Vanguardia
Vanguardia
1,292
Mining assets (note 14)
128
151
Trade and other receivables
15
71
Inventories
7
81
Cash and cash equivalents
8
(40)
Minority interests
(4)
(384)
Borrowings
(38)
(30)
Provisions (note 26)
(3)
40
Deferred taxation (note 27)
4
(121)
Trade and other payables
(12)
1,060
Carrying value
105
(81)
Cash and cash equivalents
(8)
979
Net cash flow on acquisition
97
104
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
31 Acquisitions and disposals (continued)
Disposals comprise the following:
Elandsrand,
Elandsrand,
Deelkraal
Deelkraal
and
and
Vaal River
Free State and
Free State and
Vaal River
shaft no 2
Stone & Allied
Stone & Allied
shaft no 2
1,245
2,700
Mining assets (note 14)
245
156
-
253
Environmental Trust Fund (note 19)
23
-
-
281
Trade and other receivables
26
-
55
73
Inventories
7
7
(76)
(355)
Provisions (note 26)
(32)
(10)
(500)
-
Deferred taxation (note 27)
-
(63)
(36)
(284)
Trade and other payables
(27)
(5)
688
2,668
Carrying value
242
85
(32)
(145)
Loss on disposal of mines
(13)
(4)
656
2,523
Sale consideration
229
81
222
(688)
Recoupments taxation (note 11)
(63)
28
-
(291)
Deferred sale consideration
(26)
-
878
1,544
Net cash flow on disposals
140
109
During July 2002, an agreement was concluded with Prez Companc International to acquire its entire 46.25% equity interest in Cerro Vanguardia SA, including a loan for a consideration of $105m, R1,060m.
The Free State assets were disposed to a joint venture between Harmony Gold Mining Company Limited and African Rainbow Minerals (Proprietary) Limited with effect 1 January 2002 for a net consideration of R2,5bn. The net purchase consideration of R2.5bn consists of the contractual amount of R2.2bn and the refund of recoupments taxation of R0.7bn less the deferred compensation of R0.4bn payable on 1 January 2005.
Stone & Allied Industries (O.F.S) Limited was sold on 1 October 2002 to a group of black entrepreneurs for a consideration of R5m.
32 Subsequent changes in value of
identifiable assets and liabilities
During 2001, there was a subsequent change to the fair value of assets acquired in Geita Gold Mining Limited (Geita) and Societe des Mines de Morila S.A (Morila) as at 15 December and 3 July 2000 respectively. Subsequent to acquisition, additional evidence and audited financial statements were available to assist with the estimation of amounts assigned to the assets of Geita and Morila which resulted in fair value adjustments.
(17)
-
Mining assets
-
(2)
258
-
Goodwill (note 15)
-
30
(292)
-
Deferred taxation (note 27)
-
(34)
51
-
Trade and other payables
-
6
-
-
-
-
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
105
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
33 Related parties
Related party transactions are concluded on an arm's length basis. Details of material transactions with those related parties not dealt with elsewhere in the financial statements are summarised below:
2002 2001
Amounts
Amounts
Purchases owed
Purchases
owed
from related
to related
from related
to related
parties parties parties parties
US Dollars (m) With fellow subsidiaries of the Anglo American plc group Boart Longyear Limited - mining services
9 - 11 1
Mondi Limited - timber
18 1 15 1
Scaw Metals - A Division of Anglo Operations Limited - steel and engineering
11 1 13 1
Shaft Sinkers (Pty) Ltd - mining services
- - 12 1
With associates Rand Refinery Limited - gold refinery
2 - 3 -
SA Rands (m) With fellow subsidiaries of the Anglo American plc group Boart Longyear Limited - mining services
89
3
97
8
Mondi Limited - timber
189
5
132
8
Scaw Metals - A Division of Anglo Operations Limited -
steel and engineering
113
4
115
13
Shaft Sinkers (Pty) Ltd - mining services
- -
107
12
With associates Rand Refinery Limited - gold refinery
24
3
26
-
Directors Details relating to directors' emoluments and shareholdings in the company are disclosed in the directors' report.
Shareholders The principal shareholders of the company are detailed on page 141.
106
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
2001
2002
Figures in million
2002
2001
SA Rands
US Dollars
34 Commitments and contingencies
Acquisition of mining assets
1,017
918
Contracted for
107
85
6,004
3,234
Not contracted for
377
502
7,021
4,152
Authorised by the directors
484
587
Allocated for: Expansion of operations
2,512
1,424
- within one year
166
210
2,655
1,510
- thereafter
176
222
5,167
2,934
342
432
Maintenance of operations
1,112
1,141
- within one year
133
93
742
77
- thereafter
9
62
1,854
1,218
142
155
This expenditure will be financed from existing cash resources and future borrowings.
In the normal course of its operations, the group is exposed to gold price, currency, interest rate, liquidity and credit risks. In order to manage these risks, the group may enter into transactions which make use of both on- and off-balance sheet derivatives. The group does not acquire, hold or issue derivatives for trading purposes. The group has developed a comprehensive risk management process to facilitate, control and to monitor these risks. The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterpart limits, controlling and reporting structures.
107
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
35
Risk management activities (continued)
NET DELTA OPEN HEDGE POSITION AS AT 31 DECEMBER 2002
The group had the following net forward-pricing commitments outstanding against future production.
TABLE A: SUMMARY: ALL OPEN CONTRACTS IN THE GROUP' S GOLD HEDGE POSITION AS AT 31 DECEMBER 2002
Year 2003
2004
2005
2006
2007 2008-2012
Total
Dollar/Gold Forward contracts Amount (kg)
15,289
18,056
25,049
19,862
18,974
25,878
123,108
$/oz
$307
$313
$325
$333
$337
$355
$331
Put options purchased Amount (kg)
5,808
796
757
563
728
8,652
$/oz
$352
$291
$291
$291
$292
$332
*Delta (kg)
2,353
119
129
99
126
2,826
Put options sold Amount (kg)
12,752
7,465
20,217
$/oz
$307
$317
$311
*Delta (kg)
1,837
2,034
3,871
Call options purchased Amount (kg)
4,555
572
5,127
$/oz
$351
$360
$352
*Delta (kg)
2,339
277
2,616
Call options sold Amount (kg)
18,830
5,829
16,360
14,681
14,308
54,245
124,253
$/oz
$332
$330
$322
$329
$336
$363
$344
*Delta (kg)
13,150
3,835
11,415
9,983
9,656
35,963
84,002
Rand/Gold Forward contracts Amount (kg)
15,936
12,476
9,855
6,335
4,541
3,732
52,875
R/kg
R82,931
R98,532
R119,730
R108,426
R114,915
R119,580
R101,860
Put options purchased Amount (kg)
1,875
1,875
1,875
1,875
7,500
R/kg
R93,602
R93,602
R93,602
R93,602
R93,602
*Delta (kg)
399
322
258
209
1,188
Call options sold Amount (kg)
6,553
4,688
4,687
4,688
2,986
11,944
35,546
R/kg
R100,140
R115,284
R131,944
R132,647
R173,119
R209,288
R153,424
*Delta (kg)
3,798
2,340
2,259
2,620
1,076
4,900
16,993
108
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
35
Risk management activities (continued)
Year 2003
2004
2005
2006
2007 2008-2012
Total
A Dollar/Gold Forward contracts Amount (kg)
16,392
5,443
6,221
9,331
8,398
13,343
59,128
A$/oz
A$544
A$548
A$652
A$644
A$590
A$603
A$591
Call options purchased Amount (kg)
3,888
3,110
6,221
3,732
11,197
28,148
A$/oz
A$701
A$724
A$673
A$668
A$702
A$693
*Delta (kg)
1,251
1,368
3,776
2,400
7,469
16,264
Call options sold Amount (kg)
4,821
4,821
A$/oz
A$662
A$662
*Delta (kg)
2,354
2,354
Total net gold Delta (kg)
64,243
40,279
53,818
44,663
40,371
76,348
319,722
Delta (oz)
2,065,462
1,295,012
1,730,288
1,435,961
1,297,969
2,454,640
10,279,332
Rand/Dollar (000) Call options sold Amount ($)
10,000
10,000
ZAR per $
R9.12
R9.12
*Delta ($)
1,550
1,550
A Dollar (000) Forward contracts Amount ($)
29,428
29,275
10,847
69,550
$ per A$
A$0.59
A$0.59
A$0.51
A$0.58
109
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
35
Risk management activities (continued)
INVESTMENT MATURITY PROFILE
Fixed rate
Floating rate
investment Effective
investment Effective
amount
rate amount
rate
Maturity date
Currency
million
%
million
%
Less than one year
$
80
1.4
119
0.3
ZAR
534
12.0
1,067
11.7
A$
15
4.0
N$
51
12.0
35
10.5
FCFA
3,706
3.0
BORROWING MATURITY PROFILE (NOTE 25)
Between Between
Within one year
one and two years
two and five years
After five years
Borrowings Effective
Borrowings Effective
Borrowings Effective
Borrowings
Effective
amount
rate amount
rate amount
rate amount
rate
Currency
million
%
million
%
million
%
million
%
$
75
3.4
325
2.5
508
2.6
9
5.4
A$
15
5.3
INTEREST RATE RISK
Fixed for less than
Fixed for between
Fixed for greater than
one year
one and three years
three years
Total
Borrowings Effective
Borrowings Effective
Borrowings Effective
borrowings
amount
rate
amount
rate
amount
rate
amount
Currency million
% million
% million
% million
$
893
2.6
6
5.9
18
6.3
917
A$
15
5.3
15
CREDIT RISK
Credit risk arises from the risk that a counterpart may default or not meet its obligations timeously. The group minimises credit risk by ensuring that credit risk is spread over a number of counterparts. These counterparts are financial and banking institutions of the highest quality. Where possible, management tries to ensure that netting agreements are in place.
Trade debtors comprise a small group of international companies. No provision for doubtful debts was made as the principal debtors continue to be in a sound financial position.
The group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of counterparts. The group believes that no concentration of credit exists.
110
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the group financial statements
for the year ended 31 December 2002
35
Risk management activities (continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
TYPE OF INSTRUMENT
2002
2001
Carrying Carrying
Figures in million
amount
Fair value
amount
Fair value
US Dollars Investments (note 17)
23
23
23
23
Long-term loans (note 20)
55
55
26
26
Trade and other receivables (note 21)
255
255
156
156
Cash and cash equivalents (note 23)
413
413
191
191
Borrowings (note 25)
926
926
987
987
Trade and other payables (note 28)
250
250
206
206
Derivatives comprise the following:
(241)
(447)
(167)
(238)
Forward sale commodity contracts
(151)
(194)
(131)
(124)
Option contracts
(73)
(236)
9
(66)
Foreign exchange contracts
(17)
(17)
(26)
(26)
Foreign exchange option contracts
-
-
(19)
(22)
SA Rands Investments (note 17)
197
197
275
275
Long-term loans (note 20)
469
469
313
313
Trade and other receivables (note 21)
2,190
2,190
1,867
1,867
Cash and cash equivalents (note 23)
3,544
3,544
2,284
2,284
Borrowings (note 25)
7,938
7,938
11,811
11,811
Trade and other payables (note 28)
2,145
2,145
2,464
2,464
Derivatives comprise the following:
(2,071)
(3,834)
(1,995)
(2,852)
Forward sale commodity contracts
(1,298)
(1,665)
(1,568)
(1,490)
Option contracts
(627)
(2,023)
109
(789)
Foreign exchange contracts
(146)
(146)
(308)
(309)
Foreign exchange option contracts
-
-
(228)
(264)
The fair value amounts include off balance sheet designated hedges.
111
GROUP FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
35
Risk management activities (continued)
DERIVATIVE MATURITY PROFILE
2002
Figures in million
Total
Assets
Liabilities
US Dollars Total
(241)
297
(538)
Less: Amounts to mature within twelve months of balance sheet date
69
(233)
302
Amounts to mature thereafter
(172)
64
(236)
SA Rands Total
(2,071)
2,545
(4,616)
Less: Amounts to mature within twelve months of balance sheet date
592
(1,996)
2,588
Amounts to mature thereafter
(1,479)
549
(2,028)
2001
Figures in million
Total
Assets
Liabilities
US Dollars Total
(167)
243
(410)
Less: Amounts to mature within twelve months of balance sheet date
122
(128)
250
Amounts to mature thereafter
(45)
115
(160)
SA Rands Total
(1,995)
2,906
(4,901)
Less: Amounts to mature within twelve months of balance sheet date
1,450
(1,534)
2,984
Amounts to mature thereafter
(545)
1,372
(1,917)
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
INVESTMENTS, LONG-TERM LOANS, TRADE AND OTHER RECEIVABLES, CASH AND CASH EQUIVALENTS AND TRADE AND OTHER PAYABLES
The carrying amounts approximate fair value because of the short-term duration of these instruments.
BORROWINGS
The existing debt re-prices 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 at 31 December 2002.
36
Events after balance sheet date
AngloGold enters into a purchase and sale agreement on Jerritt Canyon Joint Venture.
On 27 February 2003, AngloGold announced that it had entered into a purchase and sale agreement with Queenstake Resources USA Inc. on its interests in the Jerritt Canyon Joint Venture. This follows an unsolicited offer by Queenstake to the Jerritt Canyon Joint Venture partners. AngloGold owns 70% of the joint venture and is the operator and managing partner of the Jerritt Canyon mine. In terms of the agreement, Queenstake will pay the Jerritt Canyon Joint Venture $8m on closing, with $6m in deferred payments, with additional royalty payments. Queenstake will accept full closure and reclamation and other liabilities. The transaction is expected to close no later than 31 March 2003.
For the year ended 31 December 2002, Jerritt Canyon produced 237,000 attributable ounces of gold at a total cash cost of $249/oz.
AngloGold does not expect this sale to have a material impact on the expected gold production for 2003.
112
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Company income statement
for the year ended 31 December 2002
The company annual financial statements are a statutory requirement, and are accordingly presented in SA Rands only.
Revenue
1
10,356
11,629
Gold income
1
9,718
11,164
Cost of sales
2
(6,383)
(8,216)
3,335
2,948
Non-hedge derivatives
794
(147)
Operating profit*
4,129
2,801
Corporate administration and other expenses
(227)
(197)
Market development costs
(173)
(133)
Net inter-company royalties, dividends and interest
(336)
(324)
Exploration costs
(126)
(95)
Investment income
3
318
54
Other net expenses
4
(72)
(30)
Finance costs
5
(162)
(189)
Abnormal item settlement of claim
(102)
Profit before exceptional items
6
3,249
1,887
Amortisation of goodwill
11
(4)
(4)
Loss on disposal of mines
25
(80)
(32)
Loss on sale of assets
(14)
Debt written off
(56)
(21)
Profit on ordinary activities before taxation
3,095
1,830
Taxation
8
(1,138)
(602)
Net profit
1,957
1,228
*
Operating profit excluding unrealised non-hedge derivatives
4,112
3,029
Figures in million
2002
2001
SA Rands
113
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Company balance sheet
as at 31 December 2002
ASSETS
Non-current assets Mining assets
10
7,974
10,126
Investments in associates
11
165
151
Investments in subsidiaries
5,747
5,795
Other investments
12
18
127
AngloGold Environmental Rehabilitation Trust
13
185
339
Inter-group balances
3,953
4,408
Derivatives
28
524
514
Long-term loans
14
333
36
18,899
21,496
Current assets Derivatives
28
1,546
1,602
Trade and other receivables
15
1,078
690
Inventories
16
397
475
Current portion of inter-group balances
769
Cash and cash equivalents
17
1,641
686
4,662
4,222
Total assets
23,561
25,718
EQUITY AND LIABILITIES
Shareholders' equity*
9,836
8,825
Non-current liabilities Borrowings
19
2,264
2,585
Provisions
20
1,068
1,333
Inter-group balances
2,198
2,637
Deferred taxation
21
2,692
2,557
Derivatives
28
1,171
1,722
9,393
10,834
Current liabilities Derivatives
28
2,124
2,865
Trade and other payables
22
1,161
1,066
Current portion of borrowings
19
1,718
Taxation
1,047
410
4,332
6,059
Total equity and liabilities
23,561
25,718
*
Shareholders' equity is analysed in the statement of changes in shareholders' equity (see page 115).
Figures in million
2002
2001
SA Rands
114
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Company cash flow statement
for the year ended 31 December 2002
Cash flows from operating activities Cash receipts from customers
10,143
11,617
Cash paid to suppliers and employees
(6,347)
(9,392)
Cash generated from operations
24
3,796
2,225
Interest received
248
47
Contributions to the AngloGold Environmental Rehabilitation Trust
13
(32)
(85)
Dividend received from unlisted associate
11
19
11
Finance costs
5
(162)
(189)
Mining and normal taxation paid
(796)
(564)
Net cash inflow from operating activities
3,073
1,445
Cash flows from investing activities Capital expenditure
10
- to expand operations
(745)
(800)
- to maintain operations
(406)
(74)
Proceeds from disposal of mine
25
1,544
878
Proceeds from sale of investments
1,828
Associate acquired
11
(11)
Other investments acquired
(291)
(1)
Inter-group loans
(1,478)
427
Repayment of loans advanced
29
1
Net cash inflow from investing activities
481
420
Cash flows from financing activities Proceeds from issue of share capital
156
85
Share issue expenses
(116)
Proceeds from borrowings
1,842
274
Repayment of borrowings
(1,753)
(325)
Dividends paid
9
(2,728)
(1,447)
Net cash outflow from financing activities
(2,599)
(1,413)
Net increase in cash and cash equivalents
955
452
Cash and cash equivalents at beginning of year
686
234
Cash and cash equivalents at end of year
17
1,641
686
Figures in million
2002
2001
SA Rands
115
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Company statement of changes in shareholders' equity
for the year ended 31 December 2002
SA Rands Balance at 31 December 2000
55
8,209
(6)
-
1,957
10,215
Effect of adoption of IAS 39
452
(135)
317
Net profit
1,228 1,228
Dividends (note 9)
(1,447) (1,447)
Ordinary shares issued
-
189
189
Net gain on cash flow hedges removed from equity and reported in income
(180) (180)
Net loss on cash flow hedges
(2,617)
(2,617)
Deferred taxation on cash flow hedges
1,063
1,063
Translation 57
57
Balance at 31 December 2001
55
8,398
51
(1,282)
1,603
8,825
Net profit
1,957 1,957
Dividends (note 9)
(2,728) (2,728)
Ordinary shares issued
2
1,581
1,583
Share issue expenses written off
(116)
(116)
Net loss on cash flow hedges removed from equity and reported in income
539 539
Net gain on cash flow hedges
592
592
Deferred taxation on cash flow hedges
(430)
(430)
Translation (386)
(386)
Balance at 31 December 2002
57
9,863
(335)
(581)
832
9,836
Note 18
18
*
Ordinary and
Ordinary and
Non-
Other com-
preference preference
distributable
prehensive
Retained
Shareholders'
Figures in million
share capital
share premium
reserves*
income
earnings
equity
116
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
1
Revenue Revenue consists of the following principal categories: Gold income
9,718
11,164
Sale of uranium, silver and sulphuric acid
357
418
Interest receivable (note 3)
281
47
10,356
11,629
2
Cost of sales Cash operating costs
5,621
7,221
Other cash costs
42
51
Total cash costs
5,663
7,272
Retrenchment costs (note 7)
30
185
Rehabilitation and other non-cash costs
138
66
Production costs
5,831
7,523
Amortisation of mining assets (notes 6, 10 and 24)
607
628
Total production costs
6,438
8,151
Inventory change
(55)
65
6,383
8,216
3
Investment income Investment income consists of the following principal categories: Interest receivable (notes 1 and 24)
281
47
Profit from associates after taxation (notes 11 and 24)
37
7
318
54
4
Other net expenses Other net expenses consist of the following principal categories: Foreign exchange gain (loss) on transactions other than sales
2
(11)
Post-retirement medical expenses for disposed mines
(41)
-
(39)
(11)
Unwinding of decommissioning obligation (notes 20 and 24)
(33)
(19)
(72)
(30)
5
Finance costs Interest paid on bank loans and overdrafts
162
182
Interest paid on debentures
-
7
(Note 24)
162
189
Figures in million
2002
2001
SA Rands
117
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
6
Profit before exceptional items is arrived at after taking account of: Auditors' remuneration
Audit fees
4
3
Under provision prior year
-
1
4
4
Amortisation of mining assets (notes 2, 10 and 24) - Owned assets
607
628
Grants for educational and community development
25
31
Operating lease charges
24
17
7
Employee benefits Employee benefits including executive directors Salaries, wages and other benefits
2,933
4,018
Defined contribution medical plan expense current medical expenses
183
227
post-retirement medical expenses
53
39
Defined contribution pension plan expense
164
263
Retrenchment costs (note 2)
30
185
Employee benefits included in cost of sales
3,363
4,732
Actuarial defined benefit plan expense analysis
Defined benefit pension plan expense - current service cost
34
35
- interest cost
85
84
- expected return on plan assets
(87)
(91)
- actuarial loss
-
20
Defined benefit post-retirement medical expense - current service cost
10
6
- interest cost
72
98
- curtailment
(153)
-
(39)
152
Actual return on plan assets
Defined benefit pension plan
6
91
The assumptions used in calculating the pension plan expense are:
%
%
Discount rate
11.5
10.5
Rate of compensation increase
7.8
7.5
Expected return on plan assets
11.5
10.5
Refer to directors' report for details of directors' emoluments.
Figures in million
2002
2001
SA Rands
118
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
Figures in million
2002
2001
SA Rands
8
Taxation Current taxation
Mining taxation
378
294
Non-mining taxation
405
240
Under provision prior year
40
-
Exceptional items - recoupments tax on Free State disposal (note 25)
688
-
- mining tax on Free State operating loss
(78)
-
1,433
534
Deferred taxation
Current (note 21)
268
149
Unrealised non-hedge derivatives (note 21)
7
(87)
Exceptional items - debt written off
6
- disposal of Free State operations
(570)
-
(295)
68
1,138
602
2002
2001
Non-mining Mining Non-mining Mining
% % % %
Tax reconciliation A reconciliation of the mining and non-mining tax rate compared with that charged in the income statement is set out in the following table:
Marginal tax rate
38
46
38 46
Adjusted for hedge revenue
-
-
36 (13)
Disallowed expenditure
2
4
9 7
Amortisation and inventory change
-
17
- 21
Mining capital allowances
-
(29)
- (20)
Mining taxation formula adjustment
-
-
- (1)
Dividends received
(14) -
(43) -
Royalties
-
(22)
- (25)
Other
6
4
2 5
Effective tax rate
32 20 42 20
119
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Figures in million
2002
2001
SA Rands
9
Dividends Ordinary shares No. 91 of 550 SA cents per ordinary share declared on 30 January 2002 and paid on 4 March 2002.
1,223
696
No. 92 of 675 SA cents per ordinary share declared on 30 July 2002 and paid on 30 August 2002.
1,505
751
2,728
1,447
No. 93 of 675 SA cents per ordinary share was declared on 30 January 2003 and paid on 28 February 2003.
Mineral
Mine
Mine
rights,
development
infra-
dumps and
costs structure
ore
reserves
Land
Total
10
Mining assets
SA Rands Cost Balance at 31 December 2001
12,848
4,141
371
34
17,394
Additions 1,038
112
1
1,151
Disposals (note 25)
(4,009)
(1,119)
(31)
(13)
(5,172)
Transfers and other movements
(70)
31
39
Balance at 31 December 2002
9,807
3,165
379
22
13,373
Accumulated amortisation Balance at 31 December 2001
4,578
2,599
91
7,268
Amortisation charge for the year (notes 2 and 6)
473
112
22
607
Disposals (note 25)
(1,761)
(711)
(5)
(2,477)
Transfers and other movements
(111)
131
(19)
1
Balance at 31 December 2002
3,179
2,131
89
5,399
Net book value at 31 December 2001
8,270
1,542
280
34
10,126
Net book value at 31 December 2002
6,628
1,034
290
22
7,974
120
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
11
Investment in associates The company has the following associated undertakings: - A 53.03% (2001: 48.48%) interest in Rand Refinery Limited, which is involved in
the refining of bullion and by-products which are sourced inter alia from South Africa and foreign gold producing mining companies. This investment is equity accounted as AngloGold only has a significant influence and not control over the financial and operating policies of this company. The year end of Rand Refinery Limited is 30 September. Equity accounting is based on the results for the twelve months ended 30 September 2002.
- A 25.0% (2001: 25.0%) interest in Oro Group (Proprietary) Limited which is involved in
the manufacture and wholesale of jewellery. The year end of Oro Group (Proprietary) Limited is 31 March. Equity accounting is based on the results for the twelve months ended 30 September 2002.
Carrying value of associates consists of: Unlisted shares at cost
84
73
Share of retained earnings brought forward
67
75
Profit after taxation (notes 3 and 24)
37
7
Acquisitions
11
Dividends
(19)
(11)
Amortisation of goodwill (note 24)
(4)
(4)
Carrying value
165
151
Directors' valuation of unlisted associates
165
151
The company's effective share of certain balance sheet items of its associates is as follows: Non-current assets
88
85
Current assets
145
102
Total assets
233
187
Non-current liabilities
32
34
Current liabilities
73
43
Total equity and liabilities
105
77
Net assets
128
110
Reconciliation of the carrying value of investments in associates with net assets Net assets
128
110
Goodwill
37
41
Carrying value
165
151
Figures in million
2002
2001
SA Rands
121
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
12
Other investments Listed investments Balance at beginning of year
104
Additions
1,717
104
Disposals
(1,821)
Balance at end of year
104
Market value of listed investments
104
Unlisted investments Balance at beginning of year
23
22
Additions
1
2
Disposals
(6)
(1)
Balance at end of year
18
23
Directors' valuation of unlisted investments
18
23
Total other investments (note 28)
18
127
Total valuation
18
127
13
AngloGold Environmental Rehabilitation Trust Balance at beginning of year
339
279
Contributions
32
85
Additional contribution Free State disposal
197
Additional funds transferred to Free State Environmental Trust Fund
(197)
Expenditure incurred
(25)
Amounts transferred in respect of Free State disposal (note 25)
(186)
Balance at end of year
185
339
14
Long-term loans Unsecured Deferred purchase consideration in respect of the sale of the Free State assets
326
Other
7
36
333
36
15
Trade and other receivables Trade debtors
12
79
Prepayments and accrued income
276
368
South African Revenue Services Value added taxation
85
123
Receivable in respect of the sale of the Free State assets
688
Other debtors
17
120
(Note 28)
1,078
690
16
Inventories At cost Gold in process
220
227
Gold on hand
1
By-products
25
72
Total metal inventories
245
300
Consumable stores at average cost
152
175
397
475
Figures in million
2002
2001
SA Rands
122
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
17
Cash and cash equivalents Cash and deposits on call
1,111
686
Money market instruments
530
(Note 28)
1,641
686
18 Share capital and premium
Share capital
Authorised
400,000,000 ordinary shares of 25 cents each (2001: 200,000,000 ordinary shares of 50 cents each.
After sub-division 400,000,000 ordinary shares of 25 cents each)
100
100
2,000,000 A redeemable preference shares of 50 cents each
1
1
5,000,000 B redeemable preference shares of 1 cent each
101
101
Issued
222,622,022 ordinary shares of 25 cents each (2001: 107,634,058 ordinary shares of 50 cents each.
After sub-division 215,268,116 ordinary shares of 25 cents each)
Balance at beginning of year
54
54
Issue of shares
2
Balance at end of year
56
54
2,000,000 A redeemable preference shares of 50 cents each
1
1
778,896 B redeemable preference shares of 1 cent each
Balance at end of year
1
1
Share premium
9,863
8,398
Share capital and premium
9,920
8,453
At a general meeting held on 5 December 2002, a share split was approved by way of a
special resolution. AngloGold's ordinary shares of 50 cents each were sub-divided into
ordinary shares of 25 cents each, with effect from the close of business on 24 December 2002.
19
Borrowings Unsecured loans
Syndicated loan facility
2,264
2,585
Interest charged at libor plus 0.75% per annum. The loan is repayable in May 2004
and is US dollar-based
Credit Agricole
1,450
Deutsche Bank
61
Economic Development Corporation
7
Local money market short-term borrowings
200
Total borrowings (note 28)
2,264
4,303
Less: Current portion of borrowings included in current liabilities
1,718
Total long-term borrowings
2,264
2,585
Amounts falling due
Within one year
1,718
Between one and two years
2,264
Between two and five years
2,585
2,264
4,303
Currency
The currency in which the borrowings are denominated is as follows:
Australian dollars
61
SA Rands
200
US Dollars
2,264
4,042
2,264
4,303
Undrawn facilities
Undrawn borrowing facilities as at 31 December 2002 are as follows:
Syndicated loan US Dollar
1,184
2,213
Figures in million
2002
2001
SA Rands
123
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
20
Provisions Post-retirement medical funding Balance at beginning of year
713
746
Disposal (note 25)
(33)
(22)
Charge to income statement
52
55
Less: Utilised during the year
(52)
(67)
Other
1
Balance at end of year
680
713
The provision for post-retirement medical funding represents the provision for health care benefits for employees and retired employees and their registered dependants.
The post-retirement benefit costs are assessed in accordance with the advice of independent professionally qualified actuaries. The actuarial method used is the projected unit credit funding method.
The assumptions used in calculating the above defined benefit post retirement medical expense is as follows:
%
%
Discount rate
11.5
11.0
Expected increase in health care costs
9.2
10.0
Short term rates ranged from 6.5% to 9.2% and long-term after 3 years at 5%
The normal retirement age is 60 years, and fully eligible age is 55 years.
The last valuation was performed as at 31 December 2002.
Environmental rehabilitation obligations Provision for decommissioning Balance at beginning of year
325
312
Unwinding of decommissioning obligation (notes 4 and 24)
33
19
Disposal (note 25)
(132)
(37)
Change in estimate
31
Balance at end of year
226
325
Provision for restoration Balance at beginning of year
295
338
Disposal (note 25)
(186)
(17)
Charge to income statement
53
7
Less: Utilised during the year
(33)
Balance at end of year
162
295
Total provisions
1,068
1,333
Figures in million
2002
2001
SA Rands
124
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
21
Deferred taxation Deferred taxation relating to temporary differences is made up as follows:
Deferred taxation liabilities
Mining assets
3,571
3,919
Inventories
101
97
Other
2
3,672
4,018
Deferred taxation assets
Provisions
458
501
Derivatives
522
960
Net deferred taxation
2,692
2,557
The movement on the deferred tax balance is as follows: Balance at beginning of year
2,557
3,867
Income statement charge (note 8)
268
149
Unrealised non-hedge derivatives (note 8)
7
(87)
Disposal
(570)
(500)
Taxation of other comprehensive income
430
(872)
Balance at end of year
2,692
2,557
22
Trade and other payables Trade creditors
200
312
Accruals
398
302
Other creditors
563
452
(Note 28)
1,161
1,066
23
Retirement benefits Defined benefit pension fund Fair value of fund assets
797
842
Present value of fund obligation
855
836
Plan (liability) asset
(58)
6
Unrecognised actuarial loss (gain)
58
(6)
Amount recognised in balance sheet
Market value of plan assets
797
842
The assumptions used in calculating the above amounts as at 31 December are:
%
%
Discount rate
11.5
10.5
Pension increase
6.1
6.5
Rate of compensation increase
7.8
7.5
Rate of return on assets
11.5
10.5
A statutory valuation of the defined benefit pension fund was performed as at 31 December 2002, and the Pension Fund was certified by the reporting actuaries as being in a sound financial position, subject to the deficit being funded through increased contributions as advised by the actuaries. In arriving at their conclusions, the actuaries took into account reasonable long-term estimates of inflation, increases in wages, salaries and pension as well as returns on investments. Calculations for the Pension Fund's financial position are carried out in years when a statutory valuation is not performed.
Contributions to the various defined contribution retirement schemes are fully expensed during the year in which they are funded and the cost of providing retirement benefits for the year amounted to R183m (2001: R263m).
All funds are governed by the Pension Funds Act of 1956 as amended.
Figures in million
2002
2001
SA Rands
125
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Figures in million
2002
2001
SA Rands
24
Cash generated from operations Profit on ordinary activities before taxation
3,095
1,830
Adjusted for: Amortisation of mining assets (notes 2, 6 and 10)
607
628
Non-cash movements
339
(38)
Interest receivable (note 3)
(281)
(47)
Profit from associates after taxation (note 3)
(37)
(7)
Unwinding of decommissioning obligation (notes 4 and 20)
33
19
Finance costs (note 5)
162
189
Movement in non-hedge derivatives
(49)
255
Amortisation of goodwill (note 11)
4
4
Debt written off
56
21
Loss on disposal of mines
27
32
Loss on disposal of assets
14
Movements in working capital
(174)
(661)
3,796
2,225
Movements in working capital: Increase in trade and other receivables
(662)
(17)
Decrease in inventories
5
109
Decrease in trade and other payables
(286)
(207)
Decrease (increase) in current portion of inter-group balances
769
(546)
(174)
(661)
25
Disposals
Elandsrand
Deelkraal
and Vaal
river shaft
Free State
No 2
Mining assets (note 10)
2,695
1,245
Environmental Trust Fund (note 13)
186
Trade and other receivables
274
Inventories
72
55
Provisions (note 20)
(351)
(76)
Deferred taxation
(500)
Trade and other payables
(273)
(36)
Carrying value
2,603
688
Loss on disposal of mines
(80)
(32)
Sale consideration
2,523
656
Recoupments taxation (notes 8 and 15)
(688)
222
Deferred sale consideration
(291)
Net cash flow on disposals
1,544
878
126
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
26
Related party transactions are concluded on an arm's length basis. Details of material transactions with those related parties not dealt with elsewhere in the financial statements are summarised below:
2002 2001
Purchases Amounts
Purchases Amounts
from related
owed to
from related
owed to
Figures in million
parties related parties
parties related parties
With fellow subsidiaries of the Anglo American plc group Boart Longyear Limited mining services
88 3 97 8
Mondi Limited timber
189 5
132 8
Scaw Metals A Division of Anglo Operations Limited steel and engineering
110 4
115 13
Shaft Sinkers (Pty) Ltd mining services
107 12
With associates Rand Refinery Limited gold refinery
24 3 26
Figures in million
2002
2001
SA Rands
27
Commitments Acquisition of mining assets Contracted for
758
441
Not contracted for
2,022
1,948
Authorised by the directors
2,780
2,389
Allocated for: Expansion of operations within one year
1,088
778
thereafter
853
1,572
1,941
2,350
Maintenance of operations within one year
794
27
thereafter
45
12
839
39
This expenditure will be financed from existing cash resources and future borrowings.
Risk management activities
In the normal course of its operations, the company is exposed to gold price, currency, interest rate, liquidity 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 to monitor these risks. The board has approved and monitors
this risk management process, inclusive of documented treasury policies, counterpart limits, 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 Audit Committee, comprising executive members and treasury executives, reviews and recommends to the Executive Committee all treasury counterparts, limits, instruments and hedge strategies. The treasurer is responsible for managing investment, gold price, currency and liquidity risk. Within the treasury function, there is an independent risk function, which monitors adherence to treasury risk management policy, counterpart and dealer limits and provides regular and detailed management reports.
GOLD PRICE AND CURRENCY RISK
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.
A number of products, including derivatives are used to manage well-defined 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 protect itself from downward fluctuations in the gold price. These derivatives may establish a minimum price for a portion of future production while maintaining the ability to benefit from increases in the gold price for the majority of future gold production.
127
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
28
Risk management activities (continued)
NET DELTA OPEN HEDGE POSITION AS AT 31 DECEMBER 2002
The company had the following net forward-pricing commitments outstanding against future production.
TABLE A: SUMMARY : ALL OPEN CONTRACTS IN THE COMPANY' S GOLD HEDGE POSITION AT 31 DECEMBER 2002
Year 2003
2004
2005
2006
2007 2008-2012
Total
Dollar/Gold Forward contracts Amount (kg)
14,013
8,709
2,644
933
3,145
7,309
8,691
$/oz
$319
$301
$372
$426
$355
$374
$213
Put options purchased Amount (kg)
4,977
4,977
$/oz
$362
$362
*Delta (kg)
2,302
2,302
Put options sold Amount (kg)
11,819
7,465
19,284
$/oz
$307
$317
$311
*Delta (kg)
1,736
2,034
3,770
Call options purchased Amount ( kg)
3,888
3,888
$/oz
$351
$351
*Delta (kg)
2,006
2,006
Call options sold Amount (kg)
15,054
3,857
14,432
13,810
13,188
52,752
113,093
$/oz
$331
$330
$321
$330
$338
$365
$346
*Delta (kg)
10,760
2,516
10,141
9,354
8,828
34,845
76,444
Denotes a long position
Rand/Gold Forward contracts Amount (kg)
15,936
12,476
9,855
6,335
4,541
3,732
52,875
R/kg
R82,931
R98,532
R119,730
R108,426 R114,915
R119,580
R101,860
Put options purchased Amount (kg)
1,875
1,875
1,875
1,875
7,500
R/kg
R93,602
R93,602
R93,602
R93,602 R93,602
*Delta (kg)
399
322
258
209
1,188
128
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
28
Risk management activities (continued)
Year 2003
2004
2005
2006
2007 2008-2012
Total
Call options sold Amount (kg)
6,553
4,688
4,687
4,688
2,986
11,944
35,546
R/kg
R100,140
R115,284
R131,944
R132,647
R173,119
R209,288
R153,424
*Delta (kg)
3,798
2,340
2,259
2,620
1,076
4,900
16,993
Total net gold *Delta (kg)
15,440
6,911
25,157
19,452
17,590
50,787
135,337
*Delta (oz)
496,393
222,186
808,819
625,380
565,521
1,632,830
4,351,129
Rand/Dollar (000) Call options sold Amount ($)
10,000
10,000
ZAR per $
R9.12
R9.12
*Delta (kg)
1,550
1,550
129
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
28
Risk management activities (continued)
INVESTMENT MATURITY PROFILE
Fixed rate
Floating rate
investment
Effective
investment
Effective
amount
rate
amount
rate
Maturity date
Currency
million
%
million
%
Less than one year
ZAR
1,295
12
237
12
$
4
1
9
1
BORROWING MATURITY PROFILE
Between
one and five years
Borrowings Effective
amount
rate
Currency
million
%
$
264
2.4
INTEREST RATE RISK
Fixed for less than one year
Borrowings Effectiveamount
rate
Currency million
%
$
264
2.4
CREDIT RISK
No provision for doubtful debts was made as the principal debtors continue to be in a sound financial position.
130
COMPANY FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Notes to the company financial statements
for the year ended 31 December 2002
28
Risk management activities (continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
TYPE OF INSTRUMENT
2002
2001
Carrying Carrying
Figures in million
amount
Fair value
amount
Fair value
SA Rands Investments (note 12)
18 18
127
145
Long-term loans (note 14)
333 333
36
36
Trade and other receivables (note 15)
1,078 1,078
690
690
Cash and cash equivalents (note 17)
1,641
1,641
686
686
Borrowings (note 19)
2,264
2,264
4,303
4,303
Trade and other payables (note 22)
1,161
1,161
1,066
1,066
Derivatives comprise the following:
(1,225)
(2,034)
(2,471)
(3,504)
Forward sale contracts
(282)
(381)
(1,874)
(1,976)
Option contracts
(832)
(1,542)
(219)
(1,112)
Foreign exchange contracts
(111)
(111)
(149)
(148)
Foreign exchange option contracts
(229)
(268)
The fair value amounts above include off balance sheet designated hedges.
DERIVATIVE MATURITY PROFILE
2002
Figures in million
Total Assets
Liabilities
SA Rands Total
(1,225)
2,070
(3,295)
Less: Amounts to mature within twelve months of balance sheet date
578
(1,546)
2,124
Amounts to mature thereafter
(647)
524 (1,171)
2001
Figures in million
Total Assets
Liabilities
Total
(2,471)
2,116
(4,587)
Less: Amounts to mature within twelve months of balance sheet date
1,263
(1,602)
2,865
Amounts to mature thereafter
(1,208)
514
(1,722)
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
INVESTMENTS, LONG-TERM LOANS, TRADE AND OTHER RECEIVABLES, CASH AND CASH EQUIVALENTS AND TRADE AND OTHER PAYABLES
The carrying amounts approximate fair value because of the short-term duration of these instruments.
BORROWINGS
DERIVATIVES
The fair values of derivatives are estimated based on the ruling market prices, volatilities and interest rates at 31 December 2002.
131
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Investment in principal subsidiaries and joint
venture interests
for the year ended 31 December 2002
Nature of
Percentage
Net loan
business
Shares held
held
Book value
account
2002
2001
2002
2001
2002 2001
2002 2001
%
%
Rm
Rm
Rm
Rm
Direct investments Advanced Mining Software Limited
C
40,000
40,000
100
100
2
2
(7)
(6)
AGRe Insurance Company Limited
H
2
1
100
100
14
17
AngloGold American Investments Limited
1
B
1
1
100
100
928
928
209
(203)
AngloGold Health Service (Pty) Limited
G
8
8
100
100
-
-
68
103
AngloGold Offshore Investments Limited
1
***
B
5,001,000
5,001,000
100
100
3,858
3,904
(1,074)
(1,084)
43,251*
43,251*
100
100
-
-
-
-
AngloGold Ventures (Pty) Limited
F
1
1
100
100
-
-
9
65
Eastvaal Gold Holdings Limited
B
454,464,000
454,464,000
100
100
917
917
(604)
(604)
Igolide Health Networks (Pty) Limited
G
100
100
100
100
-
-
-
-
Masakhisane Investment Limited
B
100
100
100
100
-
-
5
5
Nuclear Fuels Corporation of SA (Pty) Limited
E
1,450,000
1,450,000
100
100
7
7
-
-
Nufcor International Limited
9
E
3,000,000
3,000,000
50
50
18
18
-
-
Rand Refinery Limited **
I
208,471
208,471
53.03
48.48
-
-
-
-
Southvaal Holdings Limited
B
26,000,000
26,000,000
100
100
3
3
(81)
(186)
Stone and Allied Industries (O.F.S.) Limited
D
400,000
100
-
16
-
4
Indirect investments AngloGold (Colorado) Corporation
5
B
10,000
10,000
100
100
-
-
-
-
AngloGold (Jerritt Canyon) Corporation
5
B
1,000
1,000
100
100
-
-
-
-
AngloGold Argentina Limited
1
B
1
1
100
100
-
-
-
-
AngloGold Argentina S.A.
6
B
1,331,093
1,331,093
100
100
-
-
-
-
AngloGold Australia Investment Holdings Limited
1
B
2,000
2,000
100
100
-
-
-
-
43,251*
43,251*
100
100
-
-
-
-
AngloGold Australia Limited
8
B
257,462,077
257,462,077
100
100
-
-
38
83
AngloGold Brasil Ltda
7
B 8,827,437,875 8,827,437,875
100
100
-
-
-
-
AngloGold Brazil Limited
1
B
1
1
100
100
-
-
-
-
AngloGold Finance Australia Holdings Limited
10
B
1,002
1,002
100
100
-
-
-
-
43,251*
43,251*
100
100
-
-
-
-
AngloGold Finance Australia Limited
10
B
1,002
1,002
100
100
-
-
-
-
43,251*
43,251*
100
100
-
-
-
-
AngloGold Geita Holdings Limited
1
B
1,000
1,000
100
100
-
-
1,851
2,581
AngloGold Investments Australasia Limited
1
B
2,000
2,000
100
100
-
-
-
-
43,251*
43,251*
100
100
-
-
-
-
AngloGold Investments Australia Pty Ltd
8
B
1
1
100
100
-
-
-
-
AngloGold Investments (Sadex) Limited
1
B
1,000 'A'
1,000 'A'
100
100
-
-
46
62
AngloGold Mining (West Africa) Limited
2
B
5,000
5,000
100
100
-
-
-
-
AngloGold Morila Holdings Limited
1
B
1,000
1,000
100
100
-
-
-
-
AngloGold Namibia (Proprietary) Ltd
3
B
10,000
10,000
100
100
-
-
-
-
AngloGold North America Inc.
5
B
7,902
7,902
100
100
-
-
-
-
AngloGold North American Holdings Limited
1
B
1
1
100
100
-
-
145
139
AngloGold South America Limited
1
B
488,000
488,000
100
100
-
-
-
-
AngloGold South American Holdings Limited
1
B
1
1
100
100
-
-
-
-
AngloGold USA Incorporated
5
B
100
100
100
100
-
-
-
-
Cerro Vanguardia S.A.
6
A
13,875,000
6,937,500
92.50
46.25
-
-
-
-
Chellaston Limited
1
B
2
2
100
100
-
-
-
-
Cluff Resources Limited
9
B
46,819,281
46,819,281
50
50
-
-
-
-
Dysart International Limited
1
B
2
2
100
100
-
-
-
-
Erongo Holdings Limited
1
B
13,334 'A'
13,334 'A'
100
100
-
-
(17)
(23)
Minera~
ao Morro Velho Ltda
7
A 4,585,851,748 4,585,851,748
100
100
-
-
-
-
Minera~
ao Serra Grande S.A.
7
A
499,999,997
499,999,997
50
50
-
-
-
-
Quorum International Limited
1
B
2
2
100
100
-
-
-
-
Sadiola Exploration Limited
1
B
5,000 'A'
5,000 'A'
50
50
-
-
-
-
Joint ventures Geita Gold Mining Limited
11
A
1
1
50
50
-
-
-
-
Socit des Mines de Morila S.A.
4
A
400
400
40
40
-
-
1,150
1,604
Socit d'Exploitation des Mines d'Or de Sadiola S.A.
4
A
38,000
38,000
38
38
-
-
-
-
Socit d'Exploitation des Mines d'Or de Yatela S.A.
4
A
400
400
40
40
-
-
-
-
5,747
5,795
1,755
2,540
Nature of business
A Mining
B Investment holding
C Software development
D Stone crusher
E Market agent
F Marketing intermediary
G Health care
H Short-term insurance and re-assurance
I Precious metal refining * Indicates preference shares ** Accounted for as an associate as AngloGold does not govern the financial and operating policies of Rand Refinery
Limited *** The reduction in the carrying value of accrued purchase consideration in respect of lapsed/forfeited share options on the acquisition of
Acacia Resources in December 1999. There are no material losses in subsidiaries.
All companies are incorporated in the Republic of South Africa except where
otherwise indicated
1
Incorporated in the British Virgin Islands
9 Incorporated in the United Kingdom
2
Incorporated in the Isle of Man
10 Incorporated in Malta
3
Incorporated in Namibia
11 Incorporated in Tanzania
4
Incorporated in Mali
5
Incorporated in the United States of America
6
Incorporated in Argentina
7
Incorporated in Brazil
8
Incorporated in Australia
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
132
Condensed consolidated financial statements
prepared in accordance with US GAAP
The condensed consolidated financial statements have been derived from the Group's consolidated financial statements as prepared in accordance with accounting principles generally accepted in the United States ("US GAAP"). US GAAP differs in certain material respects from International Accounting Standards ("IAS"). The condensed consolidated financial statements do not include notes in support of the financial information presented therein. The Group's audited consolidated financial statements prepared in accordance with US GAAP from which the condensed consolidated financial statements have been derived, contain detailed notes prepared in accordance with US GAAP. The audited consolidated financial statements prepared in accordance with US GAAP, together with related notes, are included under Item 18 in AngloGold's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission in March 2003. The AngloGold Annual Report on Form 20-F for the year ended 31 December 2002 as filed with the United States Securities and Exchange Commission on or about 31 March 2003 and is available free of charge on EDGAR at www.sec.gov.
At a meeting in Johannesburg on 5 December 2002, AngloGold's shareholders approved, by the requisite number of votes, a stock split that had been proposed by the company's board of directors.
133
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Condensed consolidated income statement
Derived from financial statements prepared in accordance with US GAAP
Year ended 31 December
2002
2001
2000
Figures in US Dollars millions, except for share data
$
$
$
Sales and other income
1,799
2,066
2,264
Product sales
1,761
2,041
2,208
Interest, dividends and other income
38
25
56
Cost and expenses
1,369
2,059
2,508
Production costs
927
1,261
1,435
Exploration costs
28
26
44
Related party transactions
40
54
54
General and administrative
30
24
51
Royalties
25
16
9
Research and development
1
2
8
Depreciation, depletion and amortisation
333
371
439
Impairment of assets
173
387
Goodwill amortised
27
18
Interest expense
44
72
72
Employment severance costs
3
22
19
Loss on sale of mining assets
4
Loss on sale of assets
11
(Gain) loss on derivatives
(73)
5
(21)
Other
2
(7)
Income (loss) before equity income and income tax
430
7
(244)
Equity income in affiliates
4
1
4
Income (loss) before income tax provision
434
8
(240)
Deferred income and mining tax expensed
(62)
(163)
(9)
Income (loss) before minority interest
372
(155)
(249)
Minority interest
(16)
(8)
(13)
Income (loss) before cumulative effect of accounting change
356
(163)
(262)
Cumulative effect of accounting change
(10)
-
Net income (loss) applicable to common stockholders
356
(173)
(262)
Basic earnings (loss) per common share: (cents) Before cumulative effect of accounting change
160
(76)
(122)
Cumulative effect of accounting change
(5)
Net income (loss) applicable to common stockholders
160
(81)
(122)
Diluted earnings (loss) per common share: (cents) Before cumulative effect of accounting change
160
(76)
(122)
Cumulative effect of accounting change
(5)
Net income (loss) applicable to common stockholders
160
(81)
(122)
Weighted average number of common shares used in computation
221,883,567
214,278,892
213,925,974
Dividend per common share (cents)
114
84
135
134
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Condensed consolidated balance sheet
Derived from financial statements prepared in accordance with US GAAP
At 31 December
2002
2001
Figures in US Dollars, millions
$
$
Assets Current assets
1,117
647
Cash and cash equivalents
413
191
Receivables
488
293
Trade
48
45
Derivatives
233
128
Value added taxes
26
22
Other
181
98
Inventories
216
163
Property, plant and equipment
2,015
1,756
Mineral reserves
902
843
Goodwill
345
333
Derivatives
64
115
Other long-term assets
102
56
Total assets
4,545
3,750
Liabilities and Stockholders' equity Current liabilities
799
1,210
Accounts payable and accrued liabilities
282
223
Derivatives
302
250
Short-term debt
84
637
Income and mining tax payable
131
100
Long-term debt
842
350
Derivatives
236
160
Deferred income and mining tax
561
440
Provision for environmental rehabilitation
108
94
Other accrued liabilities
12
19
Provision for post-retirement medical benefits
127
95
Minority interest
40
28
Commitments and contingencies
Share capital and reserves
1,820
1,354
Common stock Stock issued 2002 222,622,022 (2001 215,268,116)
9
9
Additional paid-in capital
3,403
3,251
Accumulated other comprehensive income
(1,025)
(1,234)
Retained deficit
(567)
(672)
Total liabilities and stockholders' equity
4,545
3,750
135
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Condensed consolidated cash flow statement
Derived from financial statements prepared in accordance with US GAAP
Year ended 31 December
2002
2001
2000
Figures in US Dollars, millions
$
$
$
Net cash provided by operating activities
605
501
435
Income (loss) before cumulative effect of accounting change
356
(163)
(262)
Reconciled to net cash provided by operations:
Loss on sale of mining assets
4
Loss on sale of assets
11
Depreciation, depletion and amortisation
333
371
439
Impairment of assets
173
387
Other non cash items
93
31
Net increase in provision for environmental rehabilitation and post- retirement medical benefits
(17)
(12)
(13)
Deferred income and mining tax
(69)
52
(86)
Effect of changes in operating working capital items:
Receivables
(5)
65
(1)
Inventories
(54)
22
(2)
Accounts payable and accrued liabilities
50
(104)
(58)
Net cash used in investing activities
(91)
(148)
(630)
Cash acquired in acquisitions
8
3
Increase in non-current investments
(34)
(4)
(3)
Cash received as part of disposal
140
109
Proceeds
164
109
Contractual obligations
(24)
Cash paid as part of acquisition
(105)
(348)
Proceeds on sale of investments
158
Proceeds on sale of mining assets
1
6
8
Additions to property, plant and equipment
(271)
(298)
(301)
Loans receivable advanced
(5)
(4)
(8)
Loans receivable repaid
17
43
19
Net cash used in financing activities
(367)
(298)
(50)
(Decrease) increase in short-term debt
(616)
(347)
150
Issuance of stock
18
7
2
Share issue expenses
(11)
(3)
Increase in long-term debt
502
209
111
Dividends paid
(260)
(167)
(310)
Net increase (decrease) in cash and cash equivalents
147
55
(245)
Effect of exchange rate changes on cash
75
(59)
(53)
Cash and cash equivalents 1 January
191
195
493
Cash and cash equivalents 31 December
413
191
195
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Income statement information
Year ended 31 December
2002
2001
2000
Figures in US Dollars, millions
Notes
$
$
$
Net profit as per IAS
332
245
166
Adjusted for:
Amortisation of ore reserves and mining assets
I
(88)
(151)
(222)
IAS exceptional loss reversed
II
13
Impairment of assets
(173)
(294)
Actuarial shortfall on post-retirement medical expenses
III
(37)
(11)
Goodwill adjustments
I
28
2
2
Normandy transaction costs
IV
(11)
Other
V
(20)
2
34
Sub-total
254
(112)
(325)
Adjustments made to taxation charge
VI
103
(51)
64
Adjusted profit (loss) after taxation
357
(163)
(261)
Cumulative effect of accounting change
VII
(10)
Minority adjustments
(1)
(1)
Net income (loss) applicable to common stockholders as per US GAAP
356
(173)
(262)
Balance sheet information
At 31 December
2002
2001
Figures in US Dollars, millions
$
$
Net profit as per IAS
1,443
1,117
Adjusted for:
Ore reserves
I
902
843
Mining assets
I
(265)
(301)
Goodwill
I
(29)
(56)
Deferred taxation
VI
(181)
(171)
Post-retirement medical benefits
III
(46)
(33)
Other
V
(4)
(45)
Stockholders' equity as per US GAAP
1,820
1,354
Supplemental information to the condensed consolidated financial statements.
136
Condensed reconciliation between IAS and US GAAP
Results for the year ended and as at 31 December 2002
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ANGLO GOLD LIMITED ANNUAL REPORT 2002
137
Differences in accounting treatment between IAS and US GAAP which have a significant effect on AngloGold are noted below:
Under IAS at the formation of AngloGold on 29 June 1998 the acquisition of the participating companies and the interests in the share interest companies were accounted for using the pooling of interest method. Under US GAAP the original formation of AngloGold did not qualify as a "pooling of interest" and therefore the formation transaction was accounted for as a business combination. Subsequent acquisitions have been accounted for as business combinations under both IAS and US GAAP.
Represents the reversal of the loss on disposal of the Free State assets recorded in IAS in 2002. Under US GAAP the value of the Free State assets were written down in 2001 to the net selling price per the sale agreement.
Under IAS, post-retirement medical benefits are accounted for in accordance with the provisions of IAS 19. Under US GAAP these benefits are accounted in accordance with the provision of SFAS 106.
Under IAS the transaction costs relating to the Normandy bid were charged to share premium. Under US GAAP these expenses are expensed as an aborted business combination.
Other consists of other differences between IAS and US GAAP that are considered insignificant to be quantified individually.
Reflects the tax impact of the differences between IAS and US GAAP.
VII
The $10m (net of provision for deferred taxation of $2m) cumulative effect of change in accounting policy represents the transitional adjustment resulting from the adoption of SFAS 133 on 1 January 2001. In accordance with IAS 39, such adjustments are recorded to opening retained earnings.
Supplemental information to the condensed consolidated financial statements.
By-products
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Glossary of terms
138
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Ounces (oz) (troy)
139
Abbreviations $
United States dollars
A$
Australian dollars
ADS
American Depositary Share
bn
Billion
Capex
Capital expenditure
CHF
Swiss Francs
CLR
Carbon Leader Reef
FCFA
Communaut Financire Africaine Francs
FIFR
Fatal Injury Frequency Rate per million hours worked
g
Grams
g/t
Grams per tonne
g/TEC
Grams per total employee costed
kg
Kilograms
Libor
London interbank offer rate
LOM
Life-of-mine
LTIFR
Note that AngloGold utilises the strictest definition in reporting Lost Time Injuries in that it includes all Disabling Injuries (where an individual is unable to return to his place of regular work the next calendar day after the injury) and Restricted Work Cases (where the individual may be at work, but unable to perform full or regular duties on the next calendar day after the injury) within this definition.
m
2
/TEC
Square metres per total employee costed
m
Metre or million, depending on the context
Moz
Million ounces
Mt
Million tonnes or tons
Mtpa
Million tonnes/tons per annum
N$
Namibian dollars
NOSA
National Occupational Safety Association
oz
Ounces (troy)
oz/t
Ounces per ton
R or ZAR
South African rands
RIFR
Reportable Injury Frequency Rate per million hours worked.
t
Tons (short) or tonnes (metric)
tpa
Tonnes per annum
tpd
Tonnes per day
tpm
Tonnes per month
VCR
Ventersdorp Contact Reef
140
ANGLO GOLD LIMITED ANNUAL REPORT 2002
Shareholders' information
The primary listing of the company's ordinary shares is on the JSE Securities Exchange South Africa (JSE). Its ordinary shares are also listed on stock exchanges in London and Paris, as well as being quoted in Brussels in the form of International Depositary Receipts (IDRs), in New York in the form of American Depositary Shares (ADSs) and in Australia, in the form of Clearing House Electronic Subregister System Depositary Interests (CDIs).
All information has been restated to take cognisance of the sub-division of AngloGold's ordinary shares.
STOCK EXCHANGE INFORMATION AS AT 31 DECEMBER
2002
2001
2000
1999
1998
JSE Rands per share: Market price
- high
347.00
248.00 192.50 214.00
180.80
- low
200.00
104.20 93.00 112.50
83.70
- year end
290.50
211.00
110.50 158.30
114.60
Shares traded
- 000
117,543
91,318
49,804 63,574
36,502
London Stock Exchange Pounds per share: Market price
- high
23.26
13.90 17.76 20.86
17.68
- low
4.20
9.13 8.57 11.43
10.05
- year end
10.54
12.09 9.73 16.00
11.71
Shares traded
- 000
8,643
18,862
4,984 6,625
24,412
Euronext Paris Euros per share: (1998: French francs per share) Market price
- high
37.73
25.00
28.90 34.30
169.40
- low
18.78
14.26 14.10 16.62
94.95
- year end
33.00
19.53 15.93 25.45
110.55
Shares traded
- 000
1,917
1,678
1,894
2,824
2,874
Euronext Brussels Euros per share: (1998: Belgian francs per IDR) Market price
- high
37.50
24.90 24.98 34.10
1,030.00
- low
32.00
14.52 14.28 16.75
575.00
- year end
32.05
20.25 15.93 25.43
699.00
IDRs traded
- 000
3,138
1,638
2,004 5,270
4,546
IDRs sub-divided in line with sub-division of AngloGold ordinary shares. Each IDR is equal to one ordinary share. New York Stock Exchange (listing commenced 5 August 1998) US dollars per ADS: Market price
- high
35.33
22.34 28.69 37.00
31.00
- low
17.62
13.15 12.25 18.31
16.00
- year end
34.26
18.06 14.94 25.69
19.56
ADSs traded
- 000
210,933
106,231 46,940 41,355
14,213
Each ADS is equal to one ordinary share. Australian Stock Exchange (listing commenced 15 November 1999) Australian dollars per CDI: Market price
- high
12.00
8.00 8.68 8.90
- low
7.00
4.80 4.75 7.10
- year end
12.00
7.55 5.48 7.64
CDIs traded
- 000
6,758
62,576
17,830
4,870
Each CDI is equal to one-fifth of one ordinary share.
141
SHAREHOLDERS' INFORMATION
ANGLO GOLD LIMITED ANNUAL REPORT 2002
The following disclosures are made pursuant to the Listing Rules of the Australian Stock Exchange and according to information available to the directors:
THE 20 LARGEST HOLDERS OF THE ORDINARY SHARE CAPITAL OF THE COMPANY AS AT 31 JANUARY 2003 WERE:
Ordinary shares held
Number
%
Anglo American plc
114,457,368
51.40
The Bank of New York
30,708,963
13.79
ANZ Nominees Limited
12,063,027
5.42
JP Morgan Chase Bank
10,134,377
4.55
PIC Equity
5,900,230
2.65
Soges Fiducem
4,150,896
1.86
State Street Bank and Trust Company
3,190,788
1.43
Mineworkers Pension and Provident Fund
2,089,753
0.94
Sanlam Group
2,033,308
0.91
Old Mutual Group
1,906,871
0.86
SIS Segaintersettle AG
1,524,527
0.68
Socit Interprofessionnell Pour La Compensation Des Valeurs Mobilieres a/c Sicovam
1,376,514
0.62
National Nominees Limited
1,375,432
0.62
Liberty Group
1,231,769
0.55
RMB Group
1,138,929
0.51
Standard Bank Group
1,080,609
0.49
Deutsche Bank
1,059,841
0.48
Prudential Group
998,859
0.45
Investment Solutions
852,302
0.38
Citibank
794,581
0.36
Total
198,068,944
88.95
The above list of shareholders may not necessarily reflect the beneficial shareholders.
ANALYSIS OF ORDINARY SHAREHOLDINGS AT 31 JANUARY 2003
Number of
% of total
Number of
% of shares
Size of holding
shareholders
shareholders
shares
issued
1 - 100
5,180
31.80
330,357
0.15
101 - 500
5,914
36.32
1,183,188
0.53
501 - 1,000
1,951
11.98
890,965
0.40
1,001 - 5,000
2,345
14.40
2,814,508
1.26
5,001 - 10,000
363
2.23
1,753,828
0.79
10,001 - 100,000
434
2.67
12,512,578
5.62
Over 100,000
97
0.60
203,201,898
91.25
Total
16,284
100.00
222,687,322
100.00
Pursuant to the Listings Requirements of the JSE Securities Exchange South Africa, with the best knowledge of the directors and after reasonable enquiry, the spread of shareholders was as follows:
Class
Number of holders
%
Ordinary shares Non-public shareholders:
Directors
5
0.03
Shares held by Anglo American plc
1
0.01
Public shareholders
16,278
99.96
Total
16,284
100.00
A redeemable preference shares B redeemable preference shares
All shares are held by a wholly-owned subsidiary company
}
142
SHAREHOLDERS' INFORMATION
ANGLO GOLD LIMITED ANNUAL REPORT 2002
According to information available to the directors, the following are the only shareholders beneficially holding, directly or indirectly, in excess of 5% of the ordinary share capital of the company:
Ordinary shares held
24 February 2003
31 December 2002
31 December 2001
Number
%
Number %
Number
%
Anglo American plc
114,457,368
51.40
114,457,368
51.41
114,457,368
53.17
The Bank of New York*
41,861,108
18.80
39,879,957
17.91
30,104,646
13.98
*
Shares held through various custodians in respect of ADSs issued by the Bank.
The articles of association provide that every member present at a meeting in person or, in the case of a body corporate, represented, is entitled to one vote only on a show of hands. Upon a poll, members present or any duly appointed proxy shall have one vote for every share held. There are no limitations on the right of non-South African shareholders to hold or exercise voting rights attaching to any shares of the company. CDI holders are not entitled to vote in person at meetings, but may vote by way of proxy.
Options granted in terms of share incentive schemes do not carry a right to vote.
Diary Financial year end
31 December
Annual financial statements issued
27 March 2003
Annual general meeting
11:00 on 30 April 2003
Quarterly reports released Quarter ended 31 March 2003
30 April 2003
Quarter and six months ended 30 June 2003
31 July 2003
Quarter and nine months ended 30 September 2003
31 October 2003
Quarter and year ended 31 December 2003
30 January 2004
Dividends
Last date to trade
Payment
Payment
ordinary shares
date to
date to
Declared
cum dividend
shareholders
ADS holders
Final No. 93
30 January 2003
14 February 2003
28 February 2003
10 March 2003
Final No. 94
30 July 2003*
15 August 2003*
29 August 2003*
12 September 2003*
Final No. 95
29 January 2004*
13 February 2004*
27 February 2004*
12 March 2004*
*
Approximate dates.
Currency conversion guide At 31 December one rand was equal to:
2002
2001
Australian dollar
0.20
0.16
Euro
0.11
0.09
Japanese yen
13.72
10.83
Swiss franc
0.16
0.14
UK pound
0.07
0.06
US dollar
0.12
0.08
143
ANGLO GOLD LIMITED ANNUAL REPORT 2002
AngloGold Limited Registration No. 1944/017354/06 Incorporated in the Republic of South Africa ISIN: ZAE000043485 JSE Share code: ANG
Directors EXECUTIVE
R M Godsell (Chief Executive Officer) J G Best D L Hodgson K H Williams
NON-EXECUTIVE
R P Edey* (Chairman) Dr T J Motlatsi (Deputy Chairman) F B Arisman# Mrs E le R Bradley C B Brayshaw Dr V K Fung# A W Lea (Alternate: P G Whitcutt) W A Nairn (Alternate: A H Calver*) J Ogilvie Thompson (Alternate: D D Barber) N F Oppenheimer A J Trahar
* British # American
MANAGING SECRETARY
Ms Y Z Simelane
COMPANY SECRETARY
C R Bull
Offices REGISTERED AND CORPORATE
11 Diagonal Street Johannesburg 2001 (PO Box 62117, Marshalltown 2107) South Africa Telephone: +27 11 637 6000 Fax: +27 11 637 6624
AUSTRALIA
Level 13 St Martins Tower 44 St George's Terrace Perth, WA 6000 (PO Box Z5046, Perth WA 6831) Australia Telephone: +61 8 9425 4604 Fax: +61 8 9425 4662
UNITED KINGDOM SECRETARIES
St James's Corporate Services Limited 6 St James's Place London SW1A 1NP England Telephone: +44 20 7499 3916 Fax: +44 20 7491 1989
Share registrars SOUTH AFRICA
Computershare Investor Services Limited Ground Floor, 70 Marshall Street Johannesburg 2001 (PO Box 61051, Marshalltown 2107) South Africa Telephone: +27 11 370 7700 Fax: +27 11 688 7719
UNITED KINGDOM
Computershare Investor Services PLC PO Box 82 The Pavilions, Bridgwater Road Bristol BS99 7NH England Telephone: +44 870 702 0001 Fax: +44 870 703 6119
AUSTRALIA
Computershare Investor Services Pty Limited Level 2, 45 St George's Terrace Perth, WA 6000 (GPO Box D182 Perth WA 6840) Australia Telephone: +61 8 9323 2000 Telephone: 1300 55 7010 (in Australia) Fax: +61 8 9323 2033
ADR Depositary The Bank of New York 101 Barclay Street 22nd Floor New York, NY 10286 United States of America Telephone: +1 888 269 2377 Fax: +1 212 571 3050/3052
GLOBAL BUYDIRECT
SM
The Bank of New York maintains a direct share purchase and dividend reinvestment plan for AngloGold.
For additional information, please visit The Bank of New York's website at www.globalbuydirect.com or call Shareholder Relations at 1-888-BNY-ADRS or write to: The Bank of New York Church Street Station PO Box 11258 New York, NY 10286-1258 United States of America
Authorised representative UNITED STATES OF AMERICA
Puglisi & Associates 850 Library Avenue, Suite 204 PO Box 885 Newark, Delaware 19715 United States of America Telephone: +1 302 738 6680 Fax: +1 302 738 7210
Directorate and administration
ANGLO GOLD LIMITED ANNUAL REPORT 2002
144
South Africa STEVE LENAHAN
Telephone: +27 11 637 6248 Fax: +27 11 637 6247 E-mail: slenahan@anglogold.com
PETA BALDWIN
Telephone: +27 11 637 6647 Fax: +27 11 637 6399 E-mail: pbaldwin@anglogold.com
11 Diagonal Street Johannesburg 2001 (PO Box 62117, Marshalltown 2107) South Africa
Europe/Asia TOMASZ NADROWSKI
Telephone: (800) 417 9255 (toll free in USA and Canada) or +1 212 750 7999 Fax: +1 212 750 5626 E-mail: tnadrowski@anglogold.com
509 Madison Avenue Suite 1914 New York, NY 10022 United States of America
United States of America CHARLES CARTER
Telephone: (800) 417 9255 (toll free in USA and Canada) or +1 212 750 7999 Fax: +1 212 750 5626 E-mail: cecarter@anglogold.com
509 Madison Avenue Suite 1914 New York, NY 10022 United States of America
Australia ANDREA MAXEY
Telephone: + 61 8 9425 4604 Fax: + 61 8 9425 4662 E-mail: amaxey@anglogold.com.au
Level 13 St Martins Tower 44 St George's Terrace Perth, WA 6000 (PO Box Z5046, Perth WA 6831) Australia
Comments, questions and suggestions on AngloGold's market development programme may be directed to:
KELVIN WILLIAMS
Telephone: +27 11 637 6298 Fax: +27 11 637 6283 E-mail: khwilliams@anglogold.com
11 Diagonal Street Johannesburg 2001 (PO Box 62117, Marshalltown, 2107) South Africa
Contact information
GENERAL E-MAIL ENQUIRIES
investors@anglogold.com
ANGLO GOLD WEBSITE
http://www.anglogold.com
AngloGold Limited
(Incorporated in the
Republic of South Africa)
Registration number 1944/017354/06
ISIN: ZAE000043485 JSE Share code: ANG
("AngloGold" or "the company")This document is important
and requires your immediate
attention
If you are in any doubt about what action
you should take, consult your
stockbroker, attorney, banker, financial
adviser, accountant or other professional
adviser immediately
If you have disposed of all your shares in
AngloGold you should pass this
document and the enclosed proxy form/
voting instruction form/CDI voting
instruction form to the purchaser of such
shares or the stockbroker, banker or other
agent through whom the disposal was
effected for transmission to the purchaser
Registered and corporate office
11 Diagonal Street,
Johannesburg, 2001
(PO Box 62117
Marshalltown, 2107)
South Africa
ANGLOGOLD NOTICE OF ANNUAL GENERAL MEETING 2003
ANGLOGOLD NOTICE OF ANNUAL GENERAL MEETING 2003
1
AngloGold Limited
Annual General Meeting
INVITATION
Wednesday, 30 April 2003
11:00
The Johannesburg Country Club
Napier Road
Auckland Park
Johannesburg
South Africa
Included in this document are the following:
* Proxy form for completion, signature and submission to the share registrars by shareholders holding AngloGold ordinary shares in certificated form or recorded in sub-registered electronic form in "own name".
* Voting instruction form for completion, signature and submission by shareholders on the South African register who have dematerialised through STRATE their AngloGold ordinary shares, other than those whose shareholding is recorded in their "own name" in the sub-register maintained by their Central Securities Depository Participant (CSDP) or broker. If, however, such shareholders wish to attend the meeting in person, then they will need to request their CSDP or broker to provide them with the necessary authority in terms of the custody agreement entered into between the dematerialised shareholder and the CSDP or broker.
* CDI voting instruction form for completion, signature and submission by Australian holders of Chess Depository Interests (CDIs).
A copy of the annual report, incorporating the annual financial statements, for the financial year 2002 is also enclosed.
ANGLOGOLD NOTICE OF ANNUAL GENERAL MEETING 2003
2
"Resolved that the consolidated audited annual financial statements of the company and its subsidiaries, incorporating the auditors' and directors' reports for the year ended 31 December 2002, be received and adopted."
N M Rothschild Corporate Finance and a director of a number of other companies.
Notice of
annual general meeting
ANGLOGOLD NOTICE OF ANNUAL GENERAL MEETING 2003
3
"Resolved that in terms of the Listings Requirements of the JSE Securities Exchange South Africa (JSE), the directors are hereby authorised to issue the unissued ordinary shares of 25 cents each in the capital of the company (after setting aside so many shares as may be required to be allotted and issued by the company pursuant to The AngloGold Limited Share Incentive Scheme) for cash, without restrictions to any public shareholder, as defined by the JSE Listings Requirements, as and when suitable opportunities arise, subject to the following conditions:
(a) that this authority shall only be valid until the next annual general meeting but shall not extend beyond 15 months;
(b) that a paid press announcement giving full details, including the impact on net asset value and earnings per share, be published after any issue representing, on a cumulative basis within one financial year, 5% or more of the number of shares in issue prior to the issue concerned;(c) that the issues in the aggregate in any one financial year shall not exceed 15% of the number of shares of the company's issued ordinary share capital; and
The reason for proposing ordinary resolution number 7 is to comply with the JSE Listings Requirements relating to the issue of shares for cash. The directors consider it advantageous to renew this authority to enable the company to take advantage of any business opportunity which might arise in the future.
A 75% majority is required of the votes cast by shareholders present or represented by proxy at the meeting for the approval of this ordinary resolution.
Requirements by the subsidiaries of shares issued by the company, provided that:
any such acquisition of shares shall be implemented on the open market of the JSE and/or on the open market of any other stock exchange on which the shares are listed or may be listed and on which the company may, subject to the approval of the JSE and any other stock exchange as necessary, wish to effect such acquisition of shares;
this approval shall be valid only until the next annual general meeting of the company, but may be varied or revoked by special resolution by any general meeting of the company at any time prior to such annual general meeting;
an announcement containing details of such acquisitions will be published as soon as the company, or the subsidiaries collectively, shall have acquired shares issued by the company constituting, on a cumulative basis, not less than 3% of the number of shares in the company in issue as at the date of this approval; and an announcement containing details of such acquisitions will be published in respect of each subsequent acquisition by either the company, or by the subsidiaries collectively, as the case may be, of shares issued by the company, constituting, on a cumulative basis, not less than 3% of the number of shares in the company in issue as at the date of this approval;
the company, and its subsidiaries collectively, shall not in any financial year be entitled to acquire shares issued by the company constituting, on a cumulative basis, more than 20% of the number of shares in the company in issue as at the date of this approval;
ANGLOGOLD NOTICE OF ANNUAL GENERAL MEETING 2003
4
be adequate for a period of
12 months after the date of notice
-
A shareholder entitled to attend and vote at the annual general meeting may appoint one or more proxies to attend,
ANGLOGOLD NOTICE OF ANNUAL GENERAL MEETING 2003
5
The Johannesburg Country Club,
Napier Road,
Auckland Park,
Johannesburg,
South Africa.
Timing The AGM will start promptly at 11:00.
The outline map above indicates the location of The Johannesburg Country Club.
Shareholders and others attending the AGM are asked to register at the registration desk at the venue. Shareholders and proxies may be required to provide proof of identity.
Secured parking is provided at the venue. Mobile telephones should be switched off during the AGM.
Shareholders who intend to ask a question related to the business of the AGM or on related matters are asked to register their name, address and question(s) at the registration desk. Personnel will be on hand to provide any advice and assistance required.
If you have any queries about the AGM please telephone any of the contact names listed on page 144 of the accompanying annual report.
ANGLO GOLD LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1944/017354/06
ISIN: ZAE000043485 JSE Share Code: ANG
SIGNATURES
AngloGold Limited
Date: 27 MARCH 2003
By: /s/ C R B
ULL
_
Name: C R Bull Title: Company Secretary