2006 Annual Report

Group financial statements

Notes to the group financial statements

For the year ended 31 December

2005 2006 Figures in million 2006 2005
SA Rands         US Dollars
      31 Environmental rehabilitation and other provisions    
        Environmental rehabilitation obligations    
        Provision for decommissioning    
566 908       Balance at beginning of year 143 100
– (19)       Adjustments due to disposal of assets (3) –
282 245       Change in estimates (1) 36 44
21 38       Unwinding of decommissioning obligation (note 7) 6 3
– (2)       Utilised during the year – –
39 55       Translation (7) (4)
908 1,225       Balance at end of year 175 143
        Provision for restoration    
658 1,235       Balance at beginning of year 194 117
– (17)       Adjustments due to disposal of assets (2) –
149 11       Charge to income statement 2 23
408 (33)       Change in estimates (1) (5) 64
40 71       Unwinding of restoration obligation (note 7) 10 6
(65) (67)       Utilised during the year (10) (10)
45 100       Translation (3) (6)
1,235 1,300       Balance at end of year 186 194
        Other provisions    
70 122       Balance at beginning of year 19 13
72 137       Charge to income statement 20 11
(36) (29)       Utilised during the year (4) (6)
16 30       Translation 2 1
122 260     Balance at end of year 37 19
        Other provisions comprise the following:    
119 186     Provision for labour and civil claim court settlements in South America (2) 26 19
3 6     Provision for employee compensation claims in Australia (3) 1 –
– 60     Provision for onerous uranium contracts (4) 9 –
        Provision for long-term management incentives in Nufcor    
– 8     International Limited 1 –
122 260       37 19
2,265 2,785     Total environmental rehabilitation and other provisions 398 356
(1)
  		 The change in estimates relates to changes in laws and regulations governing the protection of the environment and factors relative to rehabilitation estimates and a change in the quantities of material in reserves and a corresponding change in the life of mine plan. These provisions are anticipated to unwind beyond the end of the life of mine.
(2)
  		 Comprises claims filed by former employees in respect of loss of employment, work-related accident injuries and diseases, government fiscal claims relating to levies and surcharges and closure costs of old tailings operations. The liability is anticipated to unwind over the next two to five-year period.
(3)
  		 Comprises workers compensation claims filed by employees in Australia with regard to work-related incidents. The liability is anticipated to unwind over the next three to five-year period.
(4)
  		 Relates to onerous uranium forward sale contracts in Nufcor International Limited. The amount indicates the estimated cost of exiting the contracts and has resulted from the market price increased above the contracted sales price. The onerous contracts have maturities up to 2011.
             
      32 Provision for pension and post-retirement benefits    
        Defined benefit plans    
        The group has made provision for pension provident and medical schemes covering substantially all employees. The retirement schemes consist of the following:    
(51) (267)     AngloGold Ashanti Pension Fund (asset) (38) (8)
1 5     Ashanti Retired Staff Pension Plan 1 –
58 62     Obuasi Mines Staff Pension Scheme 9 9
        Post-retirement medical scheme for AngloGold Ashanti South    
1,172 1,094     African employees 156 185
(16) (17)     Post-retirement medical scheme for Rand Refinery employees (asset) (2) (2)
12 13     Retiree Medical Plan for North American employees 2 2
        Supplemental Employee Retirement Plan (SERP) for North America    
6 7     (USA) Inc employees 1 1
(1) (1)     Retiree Medical Plan for Nufcor South Africa employees (asset) – –
1,181 896     Sub-total 129 187
             
        Transferred to other non-current assets (note 22)    
51 267     AngloGold Ashanti Pension Fund 38 8
1 1     Retiree Medical Plan for Nufcor South Africa employees – –
16 17     Post-retirement medical scheme for Rand Refinery employees 2 2
1,249 1,181       169 197
             
        AngloGold Ashanti Pension Fund    
The plan is evaluated by independent actuaries on an annual basis as at 31 December of each year. The valuation as at 31 December 2006 was completed at the beginning of 2007 using the projected unit credit method. 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.

A formal statutory valuation is required by legislation every three years. The previous statuary valuation was carried out with an effective date of 31 December 2005, and was completed in June of 2006. The next statutory valuation will have an effective date no later than 31 December 2008.

All South African pension funds are governed by the Pension Funds Act of 1956 as amended.

        Information with respect to the AngloGold Ashanti Pension    
        Fund is as follows:    
        Change in benefit obligation    
1,219 1,408     Balance at beginning of year 222 216
40 50     Current service cost 7 6
88 108     Interest cost 16 14
13 12     Participants’ contributions 2 2
200 84     Actuarial loss 12 31
(152) (94)     Benefits paid (14) (24)
– –     Translation (21) (23)
1,408 1,568     Balance at end of year 224 222
             
        Change in plan assets    
1,150 1,459     Balance at beginning of year 230 204
106 146     Expected return on plan assets 22 16
260 272     Actuarial gain 40 41
82 40     Company contributions 6 13
13 12     Participants’ contributions 2 2
(152) (94)     Benefits paid (14) (24)
– –     Translation (24) (22)
1,459 1,835     Fair value of plan assets at end of year 262 230
51 267     Funded status at end of year 38 8
51 267     Net amount recognised (note 22) 38 8
             
        Pension benefit obligation    
1,408 1,568     Benefit obligation 224 222
1,459 1,835     Fair value of plan assets 262 230
             
        Components of net periodic benefit cost    
40 50     Current service cost 7 6
88 108     Interest cost 16 14
(106) (146)     Expected return on assets (22) (16)
22 12     Net periodic benefit cost 1 4
             
        Assumptions    
        Assumptions used to determine benefit obligations at the end of the    
        year are as follows:    
        Discount rate 8.00% 7.75%
        Rate of compensation increase (1) 5.50% 5.00%
        Expected long-term return on plan assets 10.50% 10.14%
        Pension increase 4.28% 4.05%
(1)
  		 The short-term compensation rate increase is 6% (2005: 5%) and the long-term compensation rate increase is 5.5% (2005: 5%).
         
The expected long-term return on plan assets is determined using the after tax yields of the various asset classes as a guide.
Plan assets    
AngloGold Ashanti’s pension plan asset allocations at the end of the    
year, by asset category, are as follows:    
     
Asset category    
Equity securities 68% 69%
Debt securities 28% 30%
Other 4% 1%
  100% 100%
Investment policy    
The Trustees have adopted a long-term horizon in formulating the Fund’s investment strategy, which is consistent with the term of the Fund’s liabilities. The investment strategy aims to provide a reasonable return relative to inflation across a range of market conditions.

The Trustees have adopted different strategic asset allocations for the assets backing pensioner and active member liabilities. The strategic asset allocation defines what proportion of the Fund’s assets should be invested in each major asset class. The Trustees have then selected specialist investment managers to manage the assets in each asset class according to specific performance mandates instituted by the Trustees.

The Trustees have also put in place a detailed Statement of Investment Principles that sets out the Fund’s overall investment philosophy and strategy.

Fund returns are calculated on a monthly basis, and the performance of the managers and Fund as a whole is formally reviewed by the Fund’s Investment Sub-Committee at least every six months.

 
          2006 2005
      Percentage   Percentage  
  Figures in million Number of total   of total  
    of shares assets Fair value   assets Fair value
  US Dollars          
  Related parties          
  Investments held in related parties are summarised as follows:          
  Equity securities          
  Anglo American 40,400 0.8% 2 11.9% 27
  AngloGold Ashanti Limited 32,960 0.6% 2 0.8% 2
  Fellow subsidiaries of Anglo American plc group to April 2006 (1)          
  Anglo Platinum Group       13.5% 31
  The Tongaat-Hulett Group       1.1% 3
        4   63
  Other investments exceeding 5% of total plan assets          
  Bonds          
  RSA 2015 Government Bonds 13.5%     – 5.4% 18
  RSA 2010 Government Bonds 13%     – 7.8% 12
        –   30
  No investment exceeded 5% of total plan assets in 2006.          
             
  SA Rands          
  Related parties          
  Investments held in related parties are summarised as follows:          
  Equity securities          
  Anglo American 40,400 0.8% 14 11.9% 174
  AngloGold Ashanti Limited 32,960 0.6% 11 0.8% 11
  Fellow subsidiaries of Anglo American plc group to April 2006 (1)          
  Anglo Platinum Group       13.5% 198
  The Tongaat-Hulett Group       1.1% 15
        25   398
  Other investments exceeding 5% of total plan assets          
  Bonds          
  RSA 2015 Government Bonds 13.5%     – 5.4% 113
  RSA 2010 Government Bonds 13%     – 7.8% 79
        –   192
  No investment exceeded 5% of total plan assets in 2006.          
  Cash flows          
  Contributions          
  The company expects to contribute $6 million, R40 million          
  (2006: $7 million, R46 million) to its pension plan in 2007.          
(1)
  		 During the year, AngloGold Ashanti Limited launched an equity offering which reduced Anglo American plc's interest in AngloGold Ashanti Limited. At 31 December 2006 Anglo American plc holds 41.67% of AngloGold Ashanti Limited.
 
2005 2006 Figures in million 2006 2005
SA Rands     US Dollars
      Estimated future benefit payments    
      The following pension benefit payments, which reflect the expected    
      future service, as appropriate, are expected to be paid:    
  96   2007 14  
  94   2008 13  
  92   2009 13  
  91   2010 13  
  90   2011 13  
  1,105   Thereafter 158  
           
      South American Brasil Fundambr?s pension plan    
        On 30 November 1998, the defined benefit fund was converted to a defined contribution fund with an actuarial net liability of $6 million, R51 million. This liability was revised annually by Mercer, the plan's actuary. The transfer of funds was approved by the governmental SPC agency and the actuarial net liability of $10 million, R61 million was funded and transferred to a defined contribution plan on 30 September 2005.    
           
      Information with respect to the South American Brasil    
      Fundambr?s pension plan is as follows:    
      Change in benefit obligation    
126 –   Balance at beginning of year – 22
13 –   Interest cost – 2
3 –   Actuarial loss – 1
(160) –   Settlements and curtailments – (25)
(6) –   Benefits paid – (1)
24 –   Translation – 1
– –   Balance at end of year – –
           
      Change in plan assets    
86 –   Fair value of plan assets at beginning of year – 15
8 –   Expected return on plan assets – 1
(99) –   Settlements and curtailments – (15)
(6) –   Benefits paid – (1)
11 –   Translation – –
– –   Fair value of plan assets at end of year – –
      Components of net periodic benefit cost    
13 –   Interest cost – 2
(8) –   Expected return on plan assets – (1)
5 –   Net periodic benefit cost – 1
 
         Cash flows    
        Contributions    
        No company or participant contributions were made to this fund.    
        The fund has been discontinued and the fund assets transferred to a defined contribution fund.    
             
        Estimated future benefit payments    
        There are no future benefit payments as the fund was terminated on 30 September 2005.    
             
        Ashanti Retired Staff pension plan    
        The pension scheme provides a retirement benefit to former Ashanti employees that were based at the former London office. The scheme is closed to new members and participants are either retired or are deferred members. The plan is evaluated by actuaries on an annual basis using the projected unit credit funding method. No contributions are made to the plan and it is funded with a shortfall of $1 million, R5 million (2005: $0.2 million, R1 million).    
        Information with respect to the Ashanti Retired Staff pension plan is as follows:    
        Change in benefit obligation    
20 22     Balance at beginning of year 3 3
1 1     Interest cost – –
2 5     Actuarial loss 1 –
(1) 5     Translation 1 –
22 33     Balance at end of year 5 3
             
        Change in plan assets    
18 21     Fair value of plan assets at beginning of year 3 3
1 2     Expected return on plan assets – –
2 1     Actuarial gain – –
– 4     Translation 1 –
21 28     Fair value of plan assets at end of year 4 3
(1) (5)     Unfunded status at end of year (1) –
(1) (5)     Net amount recognised (1) –
             
        Pension benefit obligation    
22 33     Benefit obligation 5 3
21 28     Fair value of plan assets 4 3
             
        Components of net periodic benefit cost    
1 1     Interest cost – –
(1) (2)     Expected return on plan assets – –
– (1)     Net periodic benefit cost – –
 
        Assumptions    
        Assumptions used to determine benefit obligations at the end of the year are as follows:    
        Discount rate 5.00% 5.00%
        Expected long-term return on plan assets 6.13% 6.07%
        Pension increase 2.50% 2.50%
        The expected long-term return on plan assets is determined using the after tax return of domestic bonds and fixed-term investments.    
        Plan assets    
        The Ashanti Retired Staff defined benefit pension plan asset allocations as at the end of the year, by asset category are as follows:    
        Asset category    
        Equity securities 55% 51%
        Debt securities 40% 41%
        Property 1% 2%
        Cash 4% 6%
          100% 100%
        Investment policy    
        The general policy of the fund is to select investments that will achieve an optimal return on the plan assets.    
        No investments are made in related party entities.    
        Cash flows    
        Contributions    
        No contributions are made to this fund since the fund is closed to new members and the current members are retired or deferred.    
        Estimated future benefit payments    
        The following benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:    
  –     2007 –  
  –     2008 –  
  –     2009 –  
  –     2010 –  
  –     2011 –  
  33     Thereafter 5  
 
        Obuasi Mines Staff Pension Scheme    
        The scheme provides monthly payments in Ghanaian currency (indexed to the US dollar) to retirees until death. The benefits under the scheme are based on the years of service and the compensation levels of the covered retirees. The scheme is closed to new members and all the scheme participants are retired. The scheme is unfunded and accordingly, no assets related to the scheme are recorded. The scheme is evaluated by actuaries on an annual basis.    
        Information with respect to the Obuasi Mines Staff Pension Scheme is as follows:    
        Change in benefit obligation    
60 58     Balance at beginning of year 9 11
3 –     Interest cost – –
(7) 7     Actuarial loss (gain) 1 (1)
(5) (7)     Benefits paid (1) (1)
7 4     Translation – –
58 62     Balance at end of year 9 9
(58) (62)     Unfunded status at end of year (9) (9)
(58) (62)     Net amount recognised (9) (9)
        Pension benefit obligation    
58 62     Benefit obligation 9 9
        Components of net periodic benefit cost    
3 –     Interest cost – –
        Assumptions    
        Assumptions used to determine benefit obligations at the end of the year are as follows:    
        Discount rate 5.0% 4.0%
        Rate of compensation increase N/A N/A
        Pension increase 4.5% 3.0%
 
Cash flows    
Contributions    
No contributions are made to this fund since the fund is closed to new members and the current members are all retired.    
Estimated future benefit payments    
The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:    
  7 2007 1  
  7 2008 1  
  7 2009 1  
  7 2010 1  
  7 2011 1  
  27 Thereafter 4  
    Post-retirement medical scheme for AngloGold Ashanti South    
    African employees    
    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. Theactuarial method used is the projected unit credit funding method. This scheme is unfunded. The last valuation was performed as at 31 December 2006.    
    Information with respect to the defined benefit liability is as follows:    
    Change in benefit obligation    
924 1,172 Benefit obligation at beginning of year 185 164
7 7 Current service cost 1 1
80 88 Interest cost 13 12
30 35 Participants’ contributions 5 5
(105) (112) Benefits paid (17) (16)
236 (96) Actuarial (gain) loss (14) 37
– – Translation (17) (18)
1,172 1,094 Balance at end of year 156 185
(1,172) (1,094) Unfunded status at end of year (156) (185)
(1,172) (1,094) Net amount recognised (156) (185)
 
        Components of net periodic benefit cost    
7 7     Current service cost 1 1
80 88     Interest cost 13 12
87 95     Net periodic benefit cost 14 13
             
        The assumptions used in calculating the above amounts at year end are:    
        Discount rate 8.00% 7.75%
        Expected increase in health care costs 4.75% 5.00%
             
        Assumed health care cost trend rates at 31 December:    
        Health care cost trend assumed for next year 4.75% 5.00%
        Rate to which the cost trend is assumed to decline (the ultimate trend rate) 4.75% 5.00%
             
        Year that the rate reaches the ultimate trend N/A N/A
             
  1% point
increase		     Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A 1% point change in assumed health care cost trend rates would have the following effect: 1% point
increase		  
             
  10     Effect on total service and interest cost 1  
  111     Effect on post-retirement benefit obligation 16  
  1% point       1% point  
  decrease       decrease  
  (9)     Effect on total service and interest cost (1)  
  (95)     Effect on post-retirement benefit obligation (14)  
        Cash flows    
        Contributions    
        AngloGold Ashanti expects to contribute $25 million, R178 million (2006: $13 million, R82 million) to the post-retirement medical plan in 2007.    
        Estimated future benefit payments    
        The following medical benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:    
  77     2007 11  
  79     2008 11  
  80     2009 11  
  81     2010 12  
  81     2011 12  
  696     Thereafter 99  
 
        Post-retirement medical scheme for Rand Refinery employees    
        The Rand Refinery Retiree Medical Plan (Medipref) is a non-contributory defined benefit plan in respect of certain past qualifying employees. The accumulated post-employment medical aid obligation was determined by independent actuaries in September 2006 using the projected unit credit funding method. Movements that could impact the valuation between the interim date and the date of the balance sheet have been considered. The plan is fully funded and is evaluated by independent actuaries on an annual basis.    
        Information with respect to the post-retirement medical plan and obligation for the Rand Refinery Ltd past employees is as follows:    
        Change in benefit obligation    
16 16     Balance at beginning of year 3 3
1 1     Interest cost – –
– (1)     Actuarial gain – –
(1) (1)     Benefits paid – –
– –     Translation (1) –
16 15     Balance at end of year 2 3
             
        Change in plan assets    
30 32     Fair value of plan assets at beginning of year 5 5
3 2     Expected return on plan assets – –
– (1)     Actuarial loss – –
(1) (1)     Benefits paid – –
– –     Translation (1) –
32 32     Fair value of plan assets at end of year 4 5
16 17     Funded status at end of year 2 2
16 17     Net amount recognised (note 22) 2 2
             
        Components of net periodic benefit cost    
1 1     Interest cost – –
(3) (2)     Expected return on plan assets – –
(2) (1)     Net periodic benefit cost – –
 
        Assumptions    
        Assumptions used at year end are as follows:    
        Discount rate 8.50% 7.75%
        Expected increase in health care costs 6.50% 5.75%
        Expected return on plan assets 7.77% 7.26%
        Assumed health care cost trend rates at 31 December:    
        Health care cost trend assumed for next year 6.50% 5.75%
        Rate to which the cost trend is assumed to decline (the ultimate trend rate) 6.50% 5.75%
        Year that the rate reaches the ultimate trend N/A N/A
  1% point
increase		     Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A 1% point change in assumed health care cost trend rates would have the following effect: 1% point
increase 		  
  –     Effect on total service and interest cost –  
  1     Effect on post-retirement benefit obligation –  
  1% point       1% point  
  decrease       decrease  
  –     Effect on total service and interest cost –  
  (1)     Effect on post-retirement benefit obligation –  
             
        Plan assets    
The asset allocation of the Rand Refinery post retirement medical fund as at the end of the year, by asset category, is as follows:
Asset category    
Debt securities 76% 75%  
Cash 24% 25%  
  100% 100% 
No investments are made in related party entities.    
Cash flows    
Contributions    
Rand Refinery Limited does not make a contribution to the scheme as the scheme is closed to new members and the current members are retired.
 
      Estimated future benefit payments    
      The following medical benefit payments, which reflect the expected    
      future service, as appropriate, are expected to be paid:    
1     2007 –  
1     2008 –  
1     2009 –  
2     2010 –  
2     2011 –  
10     Thereafter 2  
Retiree Medical Plan for North American employees
AngloGold Ashanti USA provides health care and life insurance benefits for certain retired employees under the AngloGold North America Retiree Medical Plan (the Retiree Medical Plan). With effect from 31 December 1999, no additional employees were eligible to receive post-retirement benefits under the Retiree Medical Plan. Curtailment accounting was applied at 31 December 1999.
The Retiree Medical Plan is a non-contributory defined benefit plan. This plan is evaluated by independent actuaries on an annual basis. It was last evaluated by independent actuaries in September 2006 who took into account reasonable long-term estimates of increases in health care costs and mortality rates in determining the obligations of AngloGold Ashanti USA under the Retiree Medical Plan. The evaluation of the Retiree Medical Plan reflected liabilities of $2 million, R13 million (2005: $2 million, R12 million). The Retiree Medical Plan is an unfunded plan. The Retiree Medical Plan is evaluated using the projected unit credit funding method. The company does not share in future cost increases and therefore the rate of compensation increase is not applicable.
 
        Information with respect to the Retiree Medical Plan is as follows:    
        Change in benefit obligation    
11 12     Balance at beginning of year 2 2
1 1     Interest cost – –
(1) (1)     Benefit paid – –
1 1     Translation – –
12 13     Balance at end of year 2 2
(12) (13)     Unfunded status at end of year (2) (2)
(12) (13)     Net amount recognised (2) (2)
             
        Net periodic pension and post-retirement benefit costs include:    
1 1     Interest cost – –
1 1     Net periodic benefit cost – –
        Assumptions used in calculating benefit obligations at the end of the year are as follows:    
        Discount rate 5.0% 5.5%
        Benefits are fixed and independent from inflation and consequently health care increases are not relevant.    
             
        Cash flows    
        Contributions    
        No contributions are made to this fund since the fund is closed to new members and the current members are all retired.    
             
        Estimated future benefit payments    
        The following pension benefit payments, which reflect the expected    
        future service, as appropriate, are expected to be paid:    
  –     2007 –  
  –     2008 –  
  –     2009 –  
  –     2010 –  
  –     2011 –  
  13     Thereafter 2  
 
        Supplemental Employee Retirement Plan for North America (USA) Inc. employees    
        Certain former employees of Minorco (USA) Inc. were covered under the Minorco (USA) Inc. Supplemental Employee Retirement Plan (The SERP), a non-contributory defined benefit plan. The SERP was last evaluated by independent actuaries in September 2006 who took into account long-term estimates of inflation and mortality rates in determining the obligation of AngloGold Ashanti USA under the SERP. This evaluation of the SERP reflected plan liabilities of $1 million, R7 million (2005: $1 million, R6 million). The SERP is an unfunded plan and is evaluated by actuaries on an annual basis using the projected unit credit funding method.    
             
        Information with respect to the SERP is as follows:    
        Change in benefit obligation    
6 6     Balance at beginning and end of year 1 1
– –     Interest cost – –
– (1)     Benefit paid – –
– 2     Translation – –
6 7     Balance at end of year 1 1
(6) (7)     Unfunded status at end of year (1) (1)
(6) (7)     Net amount recognised (1) (1)
There is no net periodic pension and post-retirement cost during 2005 and 2006. The discount rate used to determine the benefit obligation at 31 December was 5% (2005: 5.5%).
 
No contributions are made to this fund since the fund is closed to new members and the current members are all retired.
 
Estimated future benefit payments
The pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid after 2011 and amount to $1 million, R7 million.
 
        Nuclear Fuels South Africa (NUFCOR) – Retiree Medical Plan for Nufcor South African employees    
        The Nufcor South Africa Retiree Medical Plan (Mascom) is a defined benefit plan in respect of certain past qualifying employees. The accumulated post-employment medical aid obligation was determined by independent actuaries in September 2006 using the projected unit credit funding method. Movements that could impact the valuation between the interim date and the date of the balance sheet have been considered. The plan is fully funded.    
        Information with respect to the Retiree Medical Plan for Nufcor    
        South Africa employees is as follows:    
        Change in benefit obligation    
2 2     Balance at beginning of year – –
(1) (1)     Benefit paid – –
1 1     Actuarial loss – –
2 2     Balance at end of year – –
        Change in plan assets    
2 3     Fair value of plan assets at beginning of year – –
1 1     Expected return on plan assets – –
1 –     Employee contributions – –
(1) (1)     Benefits paid – –
3 3     Fair value of plan assets at end of year – –
1 1     Funded status at end of year – –
1 1     Net amount recognised (note 22) – –
        Components of net periodic benefit cost    
(1) (1)     Expected return on plan assets – –
        Assumptions    
        Assumptions used at year end are as follows:    
        Discount rate 8.50% 7.75%
        Expected increase in health care costs 6.50% 5.75%
        Expected return on plan assets 8.50% 7.75%
        Assumed health care cost trend rates at 31 December:    
        Health care cost trend assumed for next year 6.50% 5.75%
        Rate to which the cost trend is assumed to decline    
        (the ultimate trend rate) 6.50% 5.75%
        Year that the rate reaches the ultimate trend N/A N/A
 
Cash flows
Contributions

  		 No contributions are made to this fund since the fund is closed to new members and the current members are all retired.
Estimated future benefit payments
 The medical benefit payments, which reflect the expected future service, as appropriate, are expected to be paid after 2011 and amount to $0.1 million, R1 million.
 
Plan assets
 The asset allocation of the Nufcor South Africa post-retirement medical fund as at the end of the year, by asset category, is as follows:
 
Asset category
Unit trust investment funds 100% 100%
No investments are made in related party entities.
 
Defined Contribution Funds
 Contributions to the various retirement schemes are fully expensed during the year in which they are funded and the cost of contributing to retirement benefits for the year amounted to $40 million, R274 million (2005: $31 million, R199 million).
 
Australia
 The region contributes to the Australian Retirement Fund for the provision of benefits to employees and their dependants on retirement, disability or death. 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 cost to the group of all these contributions amounted to $2 million, R14 million (2005: $2 million, R12 million).
 
     Ghana and Guinea
AngloGold Ashanti mines in Ghana and Guinea contribute to provident plans for their employees which are defined contribution plans. The funds are administered by boards of Trustees and invest mainly in Ghana and Guinea governments' treasury instruments, fixed term deposits and other projects. The cost of these contributions were $3 million, R21 million (2005: $3 million, R20 million).

Mali (Sadiola, Yatela and Morila)
 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 Ashanti seconded employees in Mali remain members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold Ashanti. The cost to the group of all these contributions amounted to $1 million, R6 million (2005: $2 million, R12 million).

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 Ashanti seconded employees at Navachab remain members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold Ashanti. The cost to the group of all these contributions amounted to $1 million, R7 million (2005: $1 million, R6 million).

North America
 AngloGold Ashanti USA sponsors a 401(k) savings plan whereby employees may contribute up to 60% of their salary, of which up to 5% is matched at a rate of 150% by AngloGold Ashanti USA. AngloGold Ashanti USA's contributions were $2 million, R11 million (2005: $2 million, R13 million).

South Africa
 South Africa contributes to various industry-based pension and provident retirement plans which covers substantially all employees and are defined contribution plans. These plans are all funded and the assets of the schemes are held in administrated funds separately from the group's assets. The cost of providing these benefits amounted to $29 million, R201 million (2005: $20 million, R130 million).

South America
 The AngloGold Ashanti South America region operates defined contribution arrangements for their employees in Brazil. These arrangements are funded by the operations (basic plan) and operations/employees (optional supplementary plan). A PGBL fund, similar to the American 401(k) type of plan, started in December 2001. Administered by Bradesco Previdencia e Seguros (which assume the risk for any eventual actuarial liabilities), this is the only private pension plan sponsored by the group. Contributions amounted to $2 million, R14 million (2005: $1 million; R6 million).

Tanzania (Geita)
Geita does not have a retirement scheme for employees. Tanzanian nationals contribute to the National Social Security Fund (NSSF) or the Parastatal Provident Fund (PPF), depending on the employee’s choice, and the company also makes a contribution on the employee’s behalf to the same fund. On leaving the group, employees may withdraw their contribution from the fund. From July 2005, the company has set up a supplemental provident fund which is administered by the Parastatal Provident Fund (PPF) with membership available to permanent National employees on a voluntary basis. The company makes no contribution towards any retirement schemes for contracted expatriate employees. AngloGold Ashanti employees seconded in Tanzania remain members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold Ashanti. The company contributes to the National Social Security Fund (NSSF) on behalf of expatriate employees. On termination of employment the company may apply for a refund of contributions from the NSSF.

               
2005 2006       2006 2005
SA Rands     Figures in million US Dollars
      33  Deferred taxation    
        Deferred taxation relating to temporary differences is made up as follows:     
          Liabilities    
9,391 11,293       Tangible assets  1,613 1,480
115 107       Inventories  15 18
189 639       Derivatives  91 30
312 120       Other 17 49
10,007 12,159     1,736 1,577
        Assets     
914 1,215       Provisions  173 144
1,099 2,321       Derivatives  331 173
841 1,117       Tax assets  160 132
112 216       Other 31 18
2,966 4,869     695 467
7,041 7,290     Net deferred taxation liability 1,041 1,110
        Included in the balance sheet as follows:     
279 432       Deferred tax assets  62 44
7,320 7,722       Deferred tax liabilities 1,103 1,154
7,041 7,290       Net deferred taxation liability 1,041 1,110
        The movement on the deferred tax balance is as follows:    
7,615 7,041     Balance at beginning of year 1,110 1,349
(1) 15     Taxation on fair value adjustments (note 28) 2 –
(747) (200)     Income statement charge (note 12) (30) (117)
19 (18)     Discontinued operations (note 13) (2) 3
(377) (167)     Taxation on other comprehensive income (note 28) (25) (58)
(68) 102     Taxation on actuarial gain (loss) (note 28) 15 (11)
600 517     Translation (29) (56)
7,041 7,290     Balance at end of year 1,041 1,110
         
No provision has been made for South African income tax or foreign tax that may result from future remittances of undistributed earnings of foreign subsidiaries or foreign corporate joint ventures because it is expected that such earnings will not be distributed as a dividend in the foreseable future. Unrecognised taxable temporary differences pertaining to undistributed earnings totalled $353 million, R2,471 million at 31 December 2006 (2005: $282 million, R1,791 million).		    
             
      34 Trade, other payables and deferred income    
        Non-current    
87 150     Deferred income 21 14
87 150       21 14
        Current    
1,374 2,040     Trade creditors 292 216
911 1,172     Accruals 167 144
31 –     Amounts due to related parties – 5
36 136     Deferred income 19 6
321 289     Unearned premiums on normal sale exempted contracts 41 51
140 64     Other creditors 9 20
2,813 3,701       528 442
2,900 3,851     Total trade, other payables and deferred income 549 456
        Current trade and other payables are non-interest bearing and are normally settled within 60 days.    
             
      35 Taxation    
368 710     Balance at beginning of year 112 65
(188) (968)     Payments during the year (143) (30)
531 1,432     Provision during the year (note 12) 210 82
8 17     Discontinued operations (note 13) 2 2
(9) 43     Translation (5) (7)
710 1,234     Balance at end of year 176 112
             
      36 Cash generated from operations    
(1,106) 859     Profit (loss) before taxation 168 (158)
        Adjusted for:    
1,744 4,590     Movement on non-hedge derivatives and other commodity contracts 627 262
3,203 4,059     Amortisation of tangible assets (notes 4, 9 and 16) 597 503
        Finance costs and unwinding of decommissioning and    
690 822     restoration obligations (note 7) 123 108
(153) (528)     Deferred stripping (75) (24)
(155) (218)     Interest receivable (note 3) (32) (25)
444 161     Operating special items 22 68
13 13     Amortisation of intangible assets (notes 4 and 17) 2 2
211 (137)     Fair value adjustment on option component of convertible bond (16) 32
265 (160)     Environmental rehabilitation and other expenditure (22) 41
(61) –     Termination of employee benefit plan – (10)
(113) 213     Other non-cash movements 27 (18)
(714) (875)     Movements in working capital (140) (108)
4,268 8,799       1,281 673
        Movements in working capital:    
(1,086) (1,852)     Increase in inventories (211) (123)
(46) (27)     Decrease (increase) in trade and other receivables 19 23
418 1,004     Increase (decrease) in trade and other payables 52 (8)
(714) (875)       (140) (108)
           
37 Related parties
  Details of material transactions with those related parties not dealt with elsewhere in the financial statements are summarised below:
    Purchases Amounts Purchases Amounts
    by (from) owed to (by) by (from) owed to (by)
    related related related related
  Figures in million parties parties parties parties
    2006 2005
  US Dollars        
  Significant shareholder Anglo American for the year 1 – 5 1
  Fellow subsidiaries of the Anglo American group to 20 April 2006 (1)        
  Anglo Coal – a division of Anglo Operations Limited – – 1 –
  Boart Longyear Limited – mining services (2) – – 5 –
  Haggie Steel Wire Rope Operations (3) 1 – 8 1
  Mondi Limited – timber 5 – 16 2
  Scaw Metals – a division of Anglo Operations Limited –        
  steel and engineering 1 – 6 1
  The Tongaat-Hulett Group Limited – – – –
  Joint ventures of AngloGold Ashanti Limited        
  BGM Management Company Pty Ltd – – – –
  Societé d’ Exploitation des Mines d’ Or de Sadiola S.A. 2 (1) – –
  Societé d’ Exploitation des Mines d’ Or de Yatela S.A. 1 – – –
  Societé des Mines de Morila S.A. 2 – (2) –
  SA Rands        
  Significant shareholder Anglo American for the year 7 – 30 7
  Fellow subsidiaries of the Anglo American group to 20 April 2006 (1)        
  Anglo Coal – a division of Anglo Operations Limited 1 – 4 2
  Boart Longyear Limited – mining services (2) – – 30 –
  Haggie Steel Wire Rope Operations (3) 7 – 50 6
  Mondi Limited – timber 30 – 105 11
  Scaw Metals – a division of Anglo Operations Limited – steel and engineering 9 – 40 4
  The Tongaat-Hulett Group Limited – – 1 –
  Joint ventures of AngloGold Ashanti Limited        
  BGM Management Company Pty Ltd – – 1 –
  Societé d’ Exploitation des Mines d’ Or de Sadiola S.A. 14 (2) (3) 1
  Societé d’ Exploitation des Mines d’ Or de Yatela S.A. 10 (2) 3 –
  Societé des Mines de Morila S.A. 14 (2) (10) –
 
Amounts owed to related parties are unsecured non-interest bearing and normally settled within 60 days.
(1)
  		 During the year, AngloGold Ashanti Limited launched an equity offering which reduced Anglo American plc's interest in AngloGold. At 31 December 2006 Anglo American plc holds 41.67% of AngloGold Ashanti Limited.
(2)
  		 Anglo American sold their interest in Boart Longyear Limited with effect from 29 July 2005.
(3)
  		 Haggie Steel Wire Rope Operation's related party transactions, previously included in Scaw Metals – a division of Anglo Operations Limited. During the 2005 year, Haggie Steel Wire Rope Operations were unbundled and are now reported separately.

Directors and other key management personnel
Details relating to directors' emoluments and shareholdings in the company are disclosed in the remuneration and directors' reports. .

Compensation to key management personnel totalled $18 million, R121 million (2005: $13 million, R79 million). This total comprised short-term employee benefits of $13 million, R90 million (2005: $11 million, R69 million); post-employment benefits of less than $1 million, R1 million, (2005: $1 million, R7 million); and share-based payments of $5 million, R31 million (2005: $1 million, R3 million).

Shareholders
The major shareholders of the company are detailed.
 
             
2005 2006     Figures in million 2006 2005
SA Rands       US Dollars
      38 Contractual commitments and contingencies    
        Operating leases    
        At 31 December 2006, the group was committed to making the following payments in respect of operating leases for amongst others, hire of plant and equipment and land and buildings. Certain contracts contain renewal options and escalation clauses for various periods of time.    
        Expiry within    
209 304     – One year 43 33
163 181     – Between one and two years 26 26
127 76     – Between two and five years 11 20
2 5     – After five years 1 –
501 566       81 79
             
        Finance leases    
        The group has finance leases for plant and equipment. These leases have terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that holds the lease. Future minimum lease payments under finance lease contracts together with the present value of the net minimum lease payments are as follows:      
               
Present           Present  
value of Minimum       Minimum value of  
payments payments       payments payments  
2006       2006  
35 45     Within one year 7 5  
67 80     Within one year but not more than five years 11 10  
– –     More than five years – –  
102 125     Total minimum lease payments 18 15  
– 23     Less: amounts representing finance charges 3 –  
102 102     Present value of minimum lease payments 15 15  
               
               
2005       2005  
               
28 44     Within one year 7 5  
77 96     Within one year but not more than five years 15 12  
2 2     More than five years – –  
107 142     Total minimum lease payments 22 17  
– 35     Less: amounts representing finance charges 5 –  
107 107     Present value of minimum lease payments 17 17  
             
        Capital commitments    
        Acquisition of tangible assets    
1,182 2,475     Contracted for 354 186
4,597 5,120     Not contracted for 731 725
5,779 7,595     Authorised by the directors 1,085 911
             
        Allocated for:    
        Project expenditure    
1,204 2,572     – within one year 367 190
671 1,855     – thereafter 265 106
1,875 4,427       632 296
             
        Stay-in-business expenditure    
3,628 2,925     – within one year 418 572
276 243     – thereafter 35 43
3,904 3,168       453 615
50 124     Share of underlying capital commitments of joint ventures 18 8
             
        Purchase obligations    
        Contracted for    
1,221 1,920     – within one year 274 192
1,288 1,327     – thereafter 190 203
2,509 3,247       464 395
990 906     Share of underlying purchase obligations of joint ventures 129 156
        Purchase obligations represent contractual obligations for the purchase of mining contract services, power, supplies, consumables, inventories, explosives and activated carbon.
 		    
        To service the above capital commitments, purchase obligations and other operational requirements, the group is dependent on existing cash resources, cash generated from operations and borrowing facilities.
 		    
        Cash generated from operations is subject to operational, market and other risks. Distributions from operations may be subject to foreign investment, exchange control laws and regulations and the quantity of foreign exchange available in offshore countries. In addition, distributions from joint ventures are subject to the relevant board approval.
 		    
        The credit facilities and other finance arrangements contain financial covenants and other similar undertakings. To the extent that external borrowings are required, the group’s covenant performance indicates that existing financing facilities will be available to meet the above commitments. To the extent that any of the financing facilities mature in the near future, the group believes that these facilities can be refinanced on similar terms to those currently in place.
 		    
        This expenditure will be financed from existing cash resources, cash from operations and future borrowings.    
             
        Contingent liabilities    
        AngloGold Ashanti’s contingent liabilities at 31 December 2006 are detailed below:    
             
        Water pumping cost – South Africa – The group is involved in a legal dispute regarding the responsibility for water pumping of the Margaret shaft at the Stilfontein mine. Following an attempt by DRDGold Limited to liquidate its North West operations and avoid incurring pumping cost, AngloGold Ashanti Limited launched an urgent application against DRDGold Limited and government departments requesting the court to order the continued pumping of water at the Stilfontein mines. The cessation of water pumping is likely to cause flooding in various of the group’s Vaal River operations.    
             
        The Department of Water Affairs and Forestry responded by issuing directives to the mining companies directing that they share the cost of pumping at the Stilfontein Margaret Shaft.    
             
        The three mining companies, Simmer and Jack Mines Limited, Harmony Gold Mining Company Limited and AngloGold Ashanti Limited, are finalising an arrangement in which responsibility for the water pumping will be transferred to an independent newly formed company. The group's responsibility will be limited to providing one- third of the start-up capital on loan account and the three mining companies will be members of the newly formed company.    
             
– –     Should the proposed arrangement not be acceptable to the courts and/or regulatory authorities, the proposal may have to be amended. Due to the uncertainty no estimate is made of any potential liabilities as management believe that the proposed arrangement is a pragmatic and reasonable basis to resolve the issue. – –
             
– –     The group has identified a number of groundwater pollution sites at its current operations in South Africa. The group has investigated a number of different technologies and methodologies that could possibly be used to remediate the pollution plumes. The viability of the suggested remediation techniques in the local geological formation in South Africa is however unknown. No sites have been remediated in South Africa. Present research and development work is focused on several pilot projects to find a solution that will in fact yield satisfactory results in South African conditions. Subject to the technology being developed as a remediation technique, no reliable estimate can be made for the obligation. – –
             
185 329     Sales tax on gold deliveries – Brazil – Mineração Serra Grande S.A.(MSG), the operator of the Crixas mine in Brazil, has received two tax assessments from the State of Goiás related to payments of sales taxes on gold deliveries for export: one for the period between February 2004 and June 2005 and the other for the period between July 2005 and May 2006. The tax authorities maintain that whenever a taxpayer exports gold mined in the State of Goiás through a branch located in a different Brazilian State, it must obtain an authorisation from the Goiás State Treasury by means of a Special Regime Agreement (Termo de Acordo re Regime Especial – TARE). The MSG operation is co-owned with Kinross Gold Corporation. AGA manages the operation and its attributable share of the first assessment is approximately $29 million, R203 million. In May 2006 MSG signed the TARE, which authorised the remittance of gold to the company’s branch in Minas Gerais specifically for export purposes. In November 2006 the administrative council’s second chamber ruled in favour of MSG and fully cancelled the tax liability related to the first period. The State of Goiás may still appeal to the full board of the State of Goiás tax administrative council. The second assessment was issued by the State of Goiás in October 2006 on the same grounds as the first assessment, and the attributable share of the assessment is approximately $18 million, R126 million. AGA believes both assessments are in violation of Federal legislation on sales taxes. 47 29
             
– 32     Morro Velho is involved in a dispute with the tax authorities, as a result of an erroneous duplication of a shipping invoice between two states in Brazil, tax authorities are claiming that VAT is payable on the second invoice. 5 –
             
35 39     VAT Disputes – Brazil – MSG received a tax assessment in October 2003 from the State of Minas Gerais related to sales taxes on gold allegedly returned from the branch in Minas Gerais to the company head office in the State of Goiás. The tax administrators rejected the company’s appeal against the assessment. The company is now dismissing the case at the judicial sphere. The company’s attributable share of the assessment is approximately $6 million, R39 million. 6 6
             
10 11     Social security payments – Brazil – Anglogold Ashanti Brazil is being accused of failing to pay certain required payments towards the social security system in Brazil during the period 1997 to 2004. Legislation is unclear on whether the contributions are actually due and payable. The amount involved is approximately $2 million, R11 million. 2 2
             
16 20     A group of employees of Mining and Building Contractors (MBC), the Obuasi underground developer, are claiming to be employees of the group. If successful there is the risk of some employees claiming rights to share options. 3 3
             
1 2     The group has a potential liability at Navachab in Namibia to pay capital costs of the water pipeline and electricity supply to the mine in case of mine closure prior to 2019. Based on current life-of-mine business plans, the group believes the likelihood of this potential liability being realised to be more than remote but less than likely. – –
             
        Guarantees    
        Financial guarantees    
100 100     The group has provided surety in favour of the lender in respect of gold loan facilities to wholly-owned subsidiaries of Oro Group (Proprietary) Limited, an associate of the group. The group has a total maximum liability, in terms of the suretyships of R100 million, $ 14 million. The suretyship agreements have a termination notice period of 90 days. The group receives a fee from the associate for providing the surety and has provided for non-performance. 14 16
             
        Hedging guarantees    
1,090 2,032     AngloGold Ashanti Limited and its wholly-owned subsidiary AngloGold Ashanti Holdings plc have issued hedging guarantees to several counterparty banks in which they have guaranteed the due performance by the Geita Management Company Limited (GMC) of its obligations under or pursuant to the hedging agreements entered into by GMC, and to the payment of all money owing or incurred by GMC as and when due. This guarantee remains in force until no sum remains to be paid under the hedging agreements and the Bank has irrevocably recovered or received all sums payable to it under the hedging agreements. The maximum potential amount of future payments is all monies due, owing or incurred by GMC under or pursuant to the hedging agreements. At 31 December 2006 the marked-to-market valuation of the GMC hedge book was negative $290 million, R2,032 million of which $249 million, R1,741 million was raised on the balance sheet and the remainder treated under the NPNS exemption. 290 172
             
4,591 7,334     The group, together with its wholly-owned subsidiary, AngloGold Ashanti Holdings plc, has provided guarantees to several counterparty banks for the hedging commitments of its wholly owned subsidiary Ashanti Treasury Services Limited (ATS). At 31 December 2006, the marked-to-market valuation of the ATS hedge book was negative $1,047 million, R7,334 million, of which $ 251 million, R1,756 million was raised on the balance sheet while the remainder was treated under the NPNS exemption. 1,047 723
        The group has issued gold delivery guarantees to several counterparty banks in which it guarantees the due performance of its subsidiaries AngloGold Ashanti USA Inc., AngloGold South America Limited and Cerro Vanguardia S.A. under their respective gold hedging agreements.    
   
39 Financial risk management activities

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

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

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

Gold price and currency risk and cash flow hedging
Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of gold. The group has transactional currency exposures. Such exposure arises from sales or purchases by an operating unit in currencies other than the units functional currency. The gold market is predominately priced in US dollars which exposes the group to the risk that fluctuations in the SA rand/US dollar, Brazilian real/US dollar, Argentinian peso/US dollar and Australian dollar/US dollar exchange rates 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 group's core business activities. Forward-sales contracts and call and put options are used by the group to protect itself from downward fluctuations in the gold price. These derivatives may establish a minimum price for a portion of future production while the group maintains the ability, to benefit from increases in the spot gold price for the majority of future gold production. At year end, the volume of outstanding forward sales contracts was 122,133kg (2005: 159,783kg).

Some of the instruments described above are designated and accounted for as cash flow hedges. The hedge forecast transactions are expected to occur over the next 10 years, in line with the maturity dates of the hedging instruments and will affect profit and loss simultaneously in an equal and opposite way. The fair value of all instruments so designated at the balance sheet date is a negative $373 million, R2,614 million (2005: negative $338 million, R2,142 million).

   
  Net delta open hedge position as at 31 December 2006
  The group had the following net forward-pricing commitments outstanding against future production.
   Summary: All open contracts in the group's commodity hedge position as at 31 December 2006
  Year 2007 2008 2009 2010 2011 2012-2016 Total
  US Dollar/Gold              
  Forward contracts              
  Amount (kg) 19,622 22,817 21,738 14,462 12,931 24,308 115,878
  $/oz $ 301 $ 314 $ 316 $ 347 $ 397 $ 418 $ 347
  Forward contracts (Long)              
  Amount (kg) 12,957 (1)           12,957
  $/oz $ 639           $ 639
  Put options purchased              
  Amount (kg) 1,455           1,455
  $/oz $ 292           $ 292
  Put options sold              
  Amount (kg) 19,259 11,555 3,748 1,882 1,882 5,645 43,971
  $/oz $ 612 $ 587 $ 530 $ 410 $ 420 $ 440 $ 559
  Call options purchased              
  Amount (kg) 14,252 6,503         20,755
  $/oz $ 398 $ 432         $ 409
  Call options sold              
  Amount (kg) 47,779 46,776 41,148 32,036 36,188 51,294 255,221
  $/oz $ 475 $ 466 $ 473 $ 458 $ 492 $ 564 $ 491
   
  Summary: All open contracts in the group's commodity hedge position as at 31 December 2006
  Year 2007 2008 2009 2010 2011 2012-2016 Total
  Rand/Gold              
  Forward contracts              
  Amount (kg) 2,138   933       3,071
  R/kg R91,299   R116,335       R98,769
  Call options sold              
  Amount (kg) 311   2,986 2,986 2,986   9,269
  R/kg R108,123   R202,054 R216,522 R230,990   R212,885
  Australian Dollar/Gold              
  Forward contracts              
  Amount (kg) 7,465 2,177 3,390 3,111     16,143
  A$/oz A$669 A$656 A$649 A$683     A$666
  Put options purchased              
  Amount (kg) 4,977           4,977
  A$/oz A$826           A$826
  Put options sold              
  Amount (kg) 5,910           5,910
  A$/oz A$800           A$800
  Call options purchased              
  Amount (kg) 3,732 3,110 1,244 3,111     11,197
  A$/oz A$668 A$680 A$694 A$712     A$686
  Call options sold              
   Amount (kg) 6,532           6,532
  A$/oz A$847           A$847
   Total net gold

              
  Delta (kg) (2) (36,687) (54,993) (62,616) (45,773) (46,952) (68,991) (316,012)
  Delta (oz) (2) (1,179,513) (1,768,063) (2,013,148) (1,471,634) (1,509,540) (2,218,109) (10,160,007)
 
The total net delta tonnage of the hedge of the group at 31 December 2005 was 10.84 Moz or 337t.
(1)
  		 Indicates a long position resulting from forward purchase contracts. The group enters into forward purchase contracts as part of its strategy to actively manage and reduce the size of the hedge book.
(2)
  		 The delta of the hedge position indicated above, is the equivalent gold position that would have the same marked-to-market sensitivity for a small change in the gold price. This is calculated using the Black-Scholes option formula with the ruling market prices, interest rates and volatilities as at 31 December 2006.
                 
  Year 2007 2008 2009 2010 2011 2012-2016 Total
  US Dollar/Silver              
  Put options purchased              
  Amount (kg) 43,545 43,545         87,090
   $/oz $ 7.40 $ 7.66         $ 7.53
  Put options sold              
  Amount (kg)  43,545 43,545         87,090
  $/oz $ 5.93 $ 6.19         $ 6.06
  Call options sold              
  Amount (kg) 43,545 43,545         87,090
  $/oz $ 8.40 $ 8.64         $ 8.52
   
  Summary: All open contracts in the group's currency hedge position as at 31 December 2006
  Year 2007 2008 2009 2010 2011 2012-2016 Total
  Rand/US Dollar (000)              
  Put options purchased              
  Amount ($) 15,000           15,000
  R per$ R7.61           R7.61
  Put options sold              
  Amount ($) 40,000           40,000
  R per$ R7.08           R7.08
  Call options sold              
  Amount ($) 55,000           55,000
  R per$ R7.34           R7.34
  Australian Dollar (000)              
  Forward contracts              
  Amount ($) 73,518 20,000         93,518
  $ per A$ $0.76 $0.73         $0.75
  Put options purchased              
  Amount ($) 10,000           10,000
  $ per A$ $0.76           $0.76
  Put options sold              
  Amount ($) 10,000           10,000
  $ per A$ $0.78           $0.78
  Call options sold              
  Amount ($) 10,000           10,000
  $ per A$ $0.75           $0.75
  The mix of hedging instruments, the volume of production hedged and the tenor of the hedging book is continually reviewed in the light of changes in operational forecasts, market conditions and the group's hedging policy.
 
  Forward sales contracts require the future delivery of gold at a specified price.
 
  A put option gives the put buyer the right, but not the obligation, to sell gold to the put seller at a predetermined price on a predetermined date.
 
  A call option gives the call buyer the right, but not the obligation, to buy gold from the call seller at a predetermined price on a predetermined date.
 
  The marked-to-market value of all derivatives, irrespective of accounting designation, making up the hedge position was negative $2.9 billion (negative R20.32 billion) as at 31 December 2006 (as at 31 December 2005: negative $1.94 billion, negative R12.32 billion). These values were based on a gold price of $636.30 per ounce, exchange rates of $1 = R7.001 and A$1 = $0.7886 and the prevailing market interest rates and volatilities at 31 December 2006. The values as at 31 December 2005 were based on a gold price of $517.00 per ounce, exchange rates of $1=R6.305 and A$1=$0.7342 and the prevailing market interest rates and volatilities at that date.
   
  Interest rate and liquidity risk
  Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest rate risk. In the ordinary course of business, the group receives cash from the proceeds of its gold sales and is required to fund working capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market-related returns while minimising risks. The group is able to actively source financing at competitive rates.
 
  The group has sufficient undrawn borrowing facilities available to fund working capital requirements.
               
               
  Cash and short-term loans advanced Fixed rate   Floating rate  
        investment Effective investment Effective
        amount rate amount rate
  Maturity date Currency          million % million %
               
               
  All less than one year USD   35 5.1 64 4.5
    ZAR   513 8.5 837 7.8
    AUD   – – 52 6.0
    BRL   – – 35 13.2
    ARS   – – 13 9.5
      NAD   134 8.3 – –
                     
  Borrowing maturity profile (note 30) Between Between      
    Within one year one and two years two and five years After five years Total
    Borrowings Effective Borrowings Effective Borrowings Effective Borrowings Effective Borrowings
    amount rate amount rate amount rate amount rate amount
  Currency million % million % million % million % million
  $ 41 5.8 189 5.9 948 2.4 1 7.4 1,179
  ZAR 73 (1) – 1,993 10.5 – – – – 2,066
  GHC 73,692 19.0 – – – – – – 73,692
                        
    Interest-rate risk Fixed for less Fixed for between Fixed for greater  
    than one year one and two years than three years Total
    Borrowings Effective Borrowings Effective Borrowings Effective Borrowings
    amount rate amount rate amount rate amount
  Currency million % million % million % million
  $ 211 6.2 964 2.4 4 3.4 1,179
  ZAR 73 (1) – 1,993 10.5 – – 2,066
  GHC 73,692 19.0 – – – – 73,692
  (1) Interest accrued on the corporate bond as at 31 December 2006.

Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the group that are not included in the tables above are non-interest bearing and are therefore not subject to interest rate risk.

   
  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 good credit quality. Where possible, management tries to ensure that netting agreements are in place. The combined maximum credit risk exposure at the balance sheet date is $655 million, R4,591 million (2005: $713 million, R4,523 million) on a contract by contract basis. Credit risk exposure netted by counter parties amounts to $68 million, R477 million (2005: $18 million, R115 million). No set-off is applied to the balance sheet due to the different maturity profiles of assets and liabilities

Trade debtors mainly comprise banking institutions purchasing gold bullion. Normal market settlement terms are two working days.

No impairment was recognised 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’s reserves and financial strength has allowed it to arrange unmargined credit lines of up to ten years with counterparties.

Fair value of financial instruments
The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the group's financial instruments as at 31 December 2006 are as follows:
 
  Type of instrument        
    2006 2005
  Figures in million Carrying Fair Carrying Fair
    amount value Amount Value
  US Dollars        
  Financial assets        
  Other investments (note 19) 126 126 102 102
  Other non-current assets 5 5 13 13
  Trade and other receivables 56 55 107 107
  Cash restricted for use (note 24) 11 11 8 8
  Cash and cash equivalents (note 25) 495 495 209 209
  Financial liabilities        
  Borrowings (note 30) 1,482 1,551 1,894 1,915
  Trade and other payables 468 468 385 385
  Derivatives 1,364 2,975 749 2,029
             
    2006 2005
  Figures in million Carrying Fair Carrying Fair
    amount value Amount Value
  SA Rands        
  Financial assets        
  Other investments (note 19) 884 884 645 645
  Other non-current assets 33 32 76 75
  Trade and other receivables 387 385 676 676
  Cash restricted for use (note 24) 75 75 52 52
  Cash and cash equivalents (note 25) 3,467 3,467 1,328 1,328
  Financial liabilities        
  Borrowings (note 30) 10,376 10,859 12,015 12,147
  Trade and other payables 3,276 3,276 2,456 2,456
  Derivatives 9,545 20,826 4,751 12,873
   
  The fair value amounts include off balance sheet normal sale exempted contracts, which are not carried on the balance sheet and excluded from the carrying amount. All other derivatives are carried at fair value.
  The amounts in the tables above do not necessarily agree with the totals in the notes as only financial assets and liabilities are shown.
    2006
      Normal Cash flow    
  Figures in million sale hedge Non-hedge  
    exempted accounted accounted Total
  US Dollars        
  Derivative (liabilities) assets comprise the following:        
     Commodity option contracts (516) – (1,056) (1,572)
     Foreign exchange option contracts – – (12) (12)
     Forward sale commodity contracts (1,061) (375) 108 (1,328)
     Forward foreign exchange contracts – 2 2 4
     Gold interest rate swaps (34) – 39 5
     Sub-total hedging (1,611) (373) (919) (2,903)
     Option component of convertible bonds – – (72) (72)
     All derivatives (1,611) (373) (991) (2,975)
     
    2005
    Normal Cash flow Non-  
  Figures in million sale hedge hedge  
    exempted accounted accounted Total
  US Dollars        
  Derivative (liabilities) assets comprise the following:        
    Commodity option contracts (446) (4) (608) (1,058)
    Foreign exchange option contracts – – (5) (5)
    Forward sale commodity contracts (828) (342) 261 (909)
    Forward foreign exchange contracts – 8 (2) 6
    Gold interest rate swaps (6) – 31 25
    Sub-total hedging (1,280) (338) (323) (1,941)
    Option component of convertible bonds – – (88) (88)
    All derivatives (1,280) (338) (411) (2,029)
           
    2006
  SA Rands        
  Derivative (liabilities) assets comprise the following:        
    Commodity option contracts (3,611) – (7,387) (10,998)
    Foreign exchange option contracts – – (84) (84)
    Forward sale commodity contracts (7,432) (2,627) 758 (9,301)
    Forward foreign exchange contracts – 13 16 29
    Gold interest rate swaps (238) – 270 32
    Sub-total hedging (11,281) (2,614) (6,427) (20,322)
    Option component of convertible bonds – – (504) (504)
    All derivatives (11,281) (2,614) (6,931) (20,826)
           
      2005
  Derivative (liabilities) assets comprise the following:        
    Commodity option contracts (2,830) (22) (3,861) (6,713)
    Foreign exchange option contracts – – (33) (33)
    Forward sale commodity contracts (5,251) (2,170) 1,653 (5,768)
    Forward foreign exchange contracts – 50 (9) 41
    Gold interest rate swaps (41) – 197 156
    Sub-total hedging (8,122) (2,142) (2,053) (12,317)
    Option component of convertible bonds – – (556) (556)
    All derivatives (8,122) (2,142) (2,609) (12,873)
     
  The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash restricted for use, cash and cash equivalents and trade and other payables
The carrying amounts approximate fair value because of the short-term duration of these instruments.

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

Investments and other non-current assets
Listed investments are carried at fair value while unlisted investments are carried at amortised cost which approximates fair value. The fair value of unlisted investments and other non-current assets has been calculated using market interest rates.

Borrowings
The fair values of listed fixed rate debt and the convertible bonds are shown at their closing market value as at 31 December 2006. The remainder of 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 as at 31 December 2006. The group uses the Black-Scholes option pricing formula to value option contracts. One of the inputs into the model is the level of volatility. These volatility levels are themselves not exchange traded and are not observable generally in the market. The group uses volatility inputs supplied by leading market participants (international banks). The group believes that no other possible alternative would result in significantly different fair value estimations.
  Derivative maturity profile
         
         
  Figures in million   2006  
    Total Assets Liabilities
  US Dollars      
  Amounts to mature within one year of balance sheet date 1,087 (649) 1,736
  Amounts to mature between one and two years 117 (6) 123
  Amounts to mature between two and five years 160 – 160
  Total 1,364 (655) 2,019
  SA Rands      
  Amounts to mature within one year of balance sheet date 7,606 (4,546) 12,152
  Amounts to mature between one and two years 822 (45) 867
  Amounts to mature between two and five years 1,117 – 1,117
  Total 9,545 (4,591) 14,136
         
      2005  
  US Dollars      
  Amounts to mature within one year of balance sheet date 399 (675) 1,074
  Amounts to mature between one and two years 117 (30) 147
  Amounts to mature between two and five years 233 (8) 241
  Total 749 (713) 1,462
  SA Rands      
  Amounts to mature within one year of balance sheet date 2,534 (4,280) 6,814
  Amounts to mature between one and two years 745 (188) 933
  Amounts to mature between two and five years 1,472 (55) 1,527
  Total 4,751 (4,523) 9,274

Notes to the group financial statements cont.

For the year ended 31 December

   
  Summary of contracted uranium sales as at 31 December 2006
  The group has the following forward pricing uranium commitments against future production
      Average
      contracted
  Year lbs '000(1) price ($/lbs)(2)
  2007 1,503 $16.47
  2008 1,869 $21.99
  2009 919 $29.91
  2010 – 2013 1,976 $35.37
   
  Great Noligwa, Kopanang and Tau Lekoa produced 1.38 million pounds of uranium oxide in 2006.
 
(1)
  		 Certain contracts allow the buyer to adjust the purchase quantity within a specified range.
(2)
  		 Certain contracts are subject to market related price adjustment mechanisms. In these cases the price disclosed indicates the previous periodic price reset.
 
   
40 Change in comparative data
  Cash flow statement
The cash flow comparative data has been amended to reclassify amounts paid for environmental rehabilitation and termination of
employee benefit plans as amounts paid to suppliers and employees. The effect of this reclassification is as follows:
  Figures in million    
    SA Rands US Dollars
  Environmental rehabilitation and other expenditure 368 57
  Other non-cash movements (368) (57)
       
  Income statement and balance sheet
AngloGold Ashanti has, as a result of further guidance on materiality assessment published in the United States of America, decided to assess materiality on a combination of two methods because it will result in a more accurate assessment of materiality on both the balance sheet and the income statement.

In previous periods, AngloGold Ashanti used the “roll over” method to assess materiality for potential adjustments. The roll over method quantifies a misstatement based on the amount of the error originating in the current year income statement, it ignores the “carryover effects” of prior year misstatements. This can result in an accumulation of significant misstatements on the balance sheet. The alternative, to the roll-over method, the iron curtain method, quantifies a misstatement based on the effects of correcting the misstatement existing on the balance sheet, irrespective of the year of occurrence.

As a result of the revised assessment criteria, AngloGold Ashanti identified an adjustment necessary to the balance sheet, principally to trade and other payables and deferred income. The adjustment, due to an accumulation over several years of immaterial amounts in the income statement, has been accounted for retrospectively, and the comparative statements for 2005 have been restated.

The effect of the change on 2005 follows. Opening retained earnings for 2005 have been reduced by $13 million, R83 million which is the amount of the adjustment relating to periods prior to 2005. The net effect on the income statement was $1 million, R7 million.

       
  Figures in million    
    SA Rands US Dollars
  Income statement    
  Reduction in costs of sales 11 2
  Increase in taxation (4) (1)
  Effect on profit attributable to equity shareholders 7 1
       
  Balance sheet    
  Assets    
  Increase in tangible assets 23 3
  Increase in inventories 6 1
  Decrease in trade and other receivables (36) (5)
  Liabilities    
  Decrease in deferred taxation (33) (5)
  Increase in trade, other payables and deferred income 102 15
  Equity    
  Decrease in retained earnings (76) (11)
  There are no cash flow effects.    
    2006 2005
       
41 Exchange rates    
  Rand/US dollar average for the year 6.77 6.37
  Rand/US dollar closing 7.00 6.35
  BRL/US dollar average for the year 2.18 2.44
  BRL/US dollar closing 2.14 2.35
  Pesos/US dollar average for the year 3.08 2.92
  Pesos/US dollar closing 3.06 3.03
  Rand/Australian dollar average for the year 5.10 4.85
  Rand/Australian dollar closing 5.53 4.65
  Australian dollar/US dollar average for the year 1.33 1.31
  Australian dollar/US dollar closing 1.27 1.36
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AngloGold Ashanti Annual Report 2006 - Annual Financial Statements