CALCULATION OF REGISTRATION FEE

 

 

Filed pursuant to Rule 424(b)(7)

Registration No. 333-132662

Prospectus Supplement to Prospectus dated March 23, 2006.

 

Up to 11,335,259 Share Rights

 

Up to 11,335,259 ADS Rights

 

and

 

Up to 11,335,259 Ordinary Shares Issuable Upon Exercise of Share Rights and ADS Rights

 

AngloGold Ashanti Limited

 

 

 

This prospectus supplement will be used by the selling security holder, Anglo South Africa Capital (Proprietary) Limited, to resell rights to subscribe for our ordinary shares (the “share rights”), which we refer to as offered shares, rights to subscribe for our American Depositary Shares, or ADSs, each representing one ordinary share (the “ADS rights” and, together with the share rights, the “rights”) and our ordinary shares issuable upon exercise of the share rights and underlying the ADSs issuable upon exercise of the ADS rights, whether in the form of ordinary shares or ADSs (collectively, the “securities”). We will not sell any securities under this prospectus supplement or receive any of the proceeds from the sale of the securities by the selling security holder.

 

The share rights were originally issued to the selling security holder in terms of our rights offering announced on May 23, 2008, which we refer to as the rights offering. Pursuant to the terms of the rights offering, the selling security holder may exchange some or a portion of its share rights for a corresponding number of ADS rights. The underwriters in the rights offering have severally agreed, subject to certain conditions, to procure subscribers, or otherwise themselves to subscribe, for any offered shares that are not subscribed for pursuant to the exercise of the rights or allocated pursuant to excess applications.

 

 

The ADS Rights

 

One ADS right entitles the holder thereof to purchase one offered ADS. A subscriber of the offered ADSs must deposit $27.81 per offered ADS subscribed, which represents 110% of the estimated ADS subscription price of $25.28 per offered ADS, to account for possible exchange rate fluctuations, foreign currency conversion costs and the depositary’s issuance fee of $0.03 per offered ADS. The estimated ADS subscription price is the U.S. dollar equivalent of the share subscription price using an exchange rate of 7.6735 rands per U.S. dollar (the Federal Reserve Bank of New York’s noon buying rate on May 22, 2008). If the actual U.S. dollar price (which will be the share subscription price of ZAR194.00 translated into U.S. dollars on or about June 27, 2008 in the case of the initial subscriptions and on or about July 7, 2008 in the case of excess allocations) plus foreign currency conversion costs and the issuance fee is less than the deposit amount, the ADS rights agent will refund the excess amount to the subscribing ADS right holder. See “The Rights Offering”. Holders of ADS rights will also have the opportunity to subscribe for additional offered ADSs at the same price if not all of the rights are exercised. The ADS rights will expire at 5:00 p.m. (New York City time) on June 23, 2008.

 

The Share Rights

 

One share right entitles the holder thereof to purchase one offered share at the share subscription price of ZAR194.00 per offered share. Holders of share rights will also have the opportunity to subscribe for additional offered shares at the same price if not all of the rights are exercised. The share rights will expire at 12:00 p.m. (Johannesburg time) on July 4, 2008.

 

 

 

 

The ADS rights are expected to trade on the NYSE under the symbol “AU RT” from May 29, 2008 until June 20, 2008 and the share rights are expected to trade on the JSE under the symbol “ANGN” from June 2, 2008 until June 27, 2008. Outstanding ADSs are traded on the New York Stock Exchange, or NYSE, under the symbol “AU”. Outstanding ordinary shares are traded on the JSE Limited, or JSE, under the symbol “ANG” and on other stock exchanges in London, Paris and Ghana and in the form of depositary interests in Brussels, Ghana and Australia.

 

We expect the offered ADSs to be delivered on or around July 7, 2008 (July 11, 2008 in the case of offered ADSs in respect of excess applications). We expect to issue the offered shares on or around July 7, 2008 (July 11, 2008 in the case of offered shares in respect of excess applications) and to have them admitted to listing and trading on the JSE on or around June 30, 2008.

 

See “Risk Factors” starting on page S-21 of this prospectus supplement to read about factors you should consider before buying our ordinary shares.

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement and the accompanying prospectus. Any representation to the contrary is a criminal offense.

 

 

Prospectus Supplement dated May 30, 2008

 

Table of Contents
Prospectus Supplements

 

 

Prospectus

 

 

This document consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering. The second part, the accompanying base prospectus, presents more general information. Generally, when we refer only to the “prospectus”, we are referring to the base prospectus, including the documents incorporated by reference in the base prospectus.

 

If the description of this offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement.

 

You should rely only on the information contained in this document or in one to which we have referred you in this prospectus. We have not authorized anyone to provide you with information that is different. This document may be used only where it is legal to sell these securities. The information in this document may be accurate only on the date hereof.

 

Unless the context requires otherwise, in this prospectus, the “Company”, “we” or “us” refers to AngloGold Ashanti Limited and its consolidated subsidiaries.

 

In this prospectus supplement, references to rands, ZAR and R are to the lawful currency of the Republic of South Africa, references to AUD dollars and A$ are to the lawful currency of Australia, references to dollars or $ are to the lawful currency of the United States, references to cedi are to the lawful currency of Ghana and references to BRL and real are to the lawful currency of Brazil.

 

 

We file annual and other reports with the SEC. The SEC maintains a website (http://www.sec.gov) on which our annual and other reports are made available. Such reports may also be read and copied at the SEC’s public reference room at 100 F Street, N.E., Washington DC 20549. Please call the SEC at +1-800-SEC-0330 for further information on the public reference room. You may also read and copy these documents at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. You may also consult reports and other information about us that we file pursuant to the rules of the JSE, the London Stock Exchange, Euronext Paris, the Ghana Stock Exchange and the Australian Stock Exchange.

 

 

This prospectus supplement includes “forward-looking information” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including, without limitation, those concerning: our strategy to reduce our gold hedging position including the extent and effect of the hedge reduction; the economic outlook for the gold mining industry; expectations regarding spot and received gold prices, production, cash costs and other operating results; growth prospects and outlook of our operations, individually or in the aggregate, including the completion and commencement of commercial operations at our exploration and production projects and the completion of acquisitions and dispositions; our liquidity and capital resources and expenditure; and the outcome and consequences of any pending litigation proceedings. These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events and generally may be identified by the use of forward-looking words or phrases such as “believe”, “aim”, “expect”, “anticipate”, “intend”, “foresee”, “forecast”, “likely”, “should”, “planned”, “may”, “estimated”, “potential” or other similar words and phrases. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements.

 

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking

statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct.

 

The risk factors described herein could affect our future results, causing these results to differ materially from those expressed in any forward-looking statements. These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on the future results.

 

You should review carefully all information, including the financial statements and the notes to the financial statements, included in this prospectus supplement (and all documents incorporated herein by reference). The forward-looking statements included in this prospectus supplement are made only as of the last practicable date and the forward-looking statements in the documents incorporated by reference are made only as of the last practicable date before the filing of such documents. We undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus supplement or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statement in this section.

 

 

The rights offering described in this document is only addressed to and directed at persons in member states of the European Economic Area, or EEA, who are “Qualified Investors” within the meaning of Article 2(1)(e) of the European Parliament and Council Directive 2003/71/EC, including any measure implementing such Directive in any member state of the EEA (the “Prospectus Directive”). In addition, in the United Kingdom, the rights offering is only addressed to and directed at (1) Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or high net worth entities falling within Article 49(2)(a)-(d) of the Order or (2) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “Relevant Persons”). The [new] offered shares and offered ADSs are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, (1) in the United Kingdom, Relevant Persons and (2) in any member state of the EEA other than the United Kingdom, Qualified Investors (together, “EU Qualifying Shareholders”).

 

Access to this document by persons (1) in the United Kingdom who are not Relevant Persons, (2) in any member state of the EEA other than the United Kingdom, who are not Qualified Investors or (3) who are resident in Japan, is permitted for information purposes only and no such persons shall have any entitlement or the ability to participate in the rights offering referred to in this document.

 

This prospectus supplement has been prepared on the basis that all offers in the United Kingdom of securities, other than the rights offering described in this prospectus supplement, will be made pursuant to an exemption under the Prospectus Directive, as implemented in the member states of the EEA, from the requirement to produce a prospectus for an offer of offered shares or offered ADSs. Accordingly any person making or intending to make any offer of our ordinary shares or ADSs within the EEA should only do so in circumstances in which no obligation arises for us or any of the underwriters to produce a prospectus for such offer. We have not authorized, nor do we authorize the making of, any offer of our ordinary shares or ADSs through any financial intermediary.

 

Each person in a Member State of the EEA which has implemented the Prospectus Directive (each, a “Relevant Member State”) who acquires any offered shares or offered ADSs to whom any offer is made under the rights offering will be deemed to have represented, acknowledged and agreed that it is an EU Qualifying Shareholder and in the case of any offered shares or offered ADSs acquired by it as a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such

financial intermediary will also be deemed to have represented, acknowledged and agreed that the offered shares or offered ADSs acquired by it have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than an EU Qualifying Shareholder, or in circumstances in which our prior consent has been given to such offer or resale; or where offered shares or offered ADSs have been acquired by it on behalf of persons in any Relevant Member State other than EU Qualifying Shareholders, the rights offer of those offered shares or offered ADSs to it is not treated under the Prospectus Directive as having been made to such persons. We and others will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements and will not be responsible for any loss occasioned by such reliance.

 

For the purposes of this provision, the expression an “offer of our ordinary shares or ADSs to the public” in relation to any of our ordinary shares or ADSs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the rights offering and the offered shares and offered ADSs to be offered so as to enable an investor to decide to purchase or subscribe for the offered shares or offered ADSs, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State.

 

In addition, due to restrictions under securities laws, the rights offering is not available to persons who are residents in Japan.

 

 

This document is not a prospectus or other disclosure document for the purposes of Chapter 6D of the Corporations Act 2001 (Cth) of Australia (the “Corporations Act”) and a copy of this document has not been lodged with the Australian Securities and Investments Commission. Nothing in this document constitutes financial product advice (as that term is defined in the Corporations Act). Nothing in this document constitutes an offer of our shares or ADSs (or an interest in our shares or ADSs) to any person in Australia except to persons who fall within one or more of the categories of “sophisticated” or “professional” investors as described in sections 708(8) and (11) of the Corporations Act.

 

 

The distribution of securities offered in Canada pursuant to the rights offering is being made in each of the Provinces and Territories of Canada (individually, a “Canadian Jurisdiction” and collectively, the “Canadian Jurisdictions”) as part of an international rights offer. The securities offered by us in the rights offering will be distributed under exemptions from the prospectus and registration requirements of applicable securities laws in each of the Canadian Jurisdictions.

 

Any resale of the securities offered hereby or in the rights offering will be restricted and must be made in accordance with, or pursuant to exemptions from, the prospectus and registration requirements available under applicable securities laws of the Canadian Jurisdictions. Canadian readers are advised to seek legal advice prior to any resale of the securities offered hereby.

 

This prospectus supplement and the documents incorporated by reference have been prepared in accordance with the laws of the United States, which differ from the requirements of applicable securities laws of the Canadian Jurisdictions. In Australia and South Africa, we are legally required to publicly report ore reserves and mineral resources according to the Australasian Code for Reporting of Mineral Resources and Ore Reserves (the “JORC Code”) and the South African Code for Reporting of Mineral Resources and Ore Reserves (the “SAMREC Code”). The SEC’s Industry Guide 7 does not recognize mineral resources. Accordingly, we do not report estimates of mineral resources in this prospectus supplement.

 

The disclosure in this prospectus supplement about mineral reserves refers to the applicable categories of the SAMREC Code rather than the categories prescribed by Canadian National Instrument 43-101 (“NI 43-101”). We believe that (i) the mineral resource and mineral reserve

categories of the SAMREC Code are substantively similar to the mineral resource and mineral reserve categories prescribed by NI 43-101; and (ii) our mineral resources and mineral reserves reported in accordance with the SAMREC Code would not be materially different if reported in accordance with the mineral resource and mineral reserve categories prescribed by NI 43-101.

 

By its receipt of this document, each Canadian investor confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

 

Canadian readers should be aware that the financial statements and other financial information contained in this prospectus supplement have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and thus may not be comparable to financial statements and financial information of Canadian companies. Holding and disposing of rights and ordinary shares or ADSs issued on the exercise of those letters of allocation may have tax consequences in Canada and other jurisdictions that are not described in this prospectus supplement. Canadian readers are advised to consult their tax advisors.

 

 

This document has been prepared in accordance with the laws of the United States and may not contain the same level of disclosure as would be required if this document was required to comply with relevant Ghanaian legislation including the Securities Industry Law, 1993 (PNDCL 333) as amended by the Securities Industry (Amendment) Law, 2000 (ACT 590), the Securities and Exchange Commission (SEC) Regulations (L.I.1728), the Ghana Stock Exchange (GSE) Rules and the Companies Code 1963 (Act 179).

 

 

The distribution of this prospectus supplement, and the exercise of the rights, may be restricted by law in certain jurisdictions. Any failure to comply with applicable restrictions may constitute a violation of the securities laws of such jurisdictions. In particular, due to restrictions under the securities laws of certain countries, shareholders resident in such countries may not exercise rights. Persons into whose possession this prospectus supplement comes or who wish to exercise any of the rights must inform themselves about and observe any such restrictions. This prospectus supplement does not constitute an offer of securities, or an invitation to exercise any of the rights, in any jurisdiction in which such offer or invitation would be unlawful. Neither we nor the selling security holder nor any of our respective advisers accepts any responsibility for any violation by any person, whether or not a prospective participant in the rights offering, of any such restrictions.

 

 

In this prospectus supplement and in documents incorporated by reference herein, we present financial items such as “total cash costs”, “total cash costs per ounce”, “total production costs” and “total production costs per ounce” that have been determined using industry standards promulgated by the Gold Institute and are not measures under generally accepted accounting principles in the United States (U.S. GAAP). An investor should not consider these items in isolation or as alternatives to any measure of financial performance presented in accordance with U.S. GAAP either in this document or in any document incorporated by reference herein.

 

While the Gold Institute has provided definitions for the calculation of “total cash costs”, “total cash costs per ounce”, “total production costs” and “total production costs per ounce”, the definitions of certain non-GAAP financial measures included herein may vary significantly from those of other gold mining companies, and by themselves do not necessarily provide a basis for comparison with

other gold mining companies. However, we believe that total cash costs and total production costs in total by mine and per ounce by mine are useful indicators to investors and management of a mine’s performance because they provide:

 

 

 

The SEC allows us to “incorporate by reference” the information we submit to it, which means that we can disclose important information to you by referring you to certain documents filed with or furnished to the SEC that are considered part of this prospectus through incorporation by reference. Information that we file with or furnish to the SEC in the future and incorporate by reference will automatically update and supersede the previously filed or furnished information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act other than any portions of the respective filings that were furnished, under applicable SEC rules, rather than filed, until we complete our offering:

 

 

You may obtain a copy of these filings at no cost by writing or telephoning us at the following address:

 

AngloGold Ashanti North America Inc.
7400 E. Orchard Road
Suite 350
Greenwood Village, CO 80111
Telephone: +1 303-889-0753
Fax: +1 303-889-0707
Email: MPatterson@AngloGoldAshantiNA.com

 

PROSPECTUS SUPPLEMENT SUMMARY

	•	production from twenty operations in ten countries: Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania and the United States;
	•	production and reserves for the year ended December 31, 2007 of 57 percent and 57 percent, respectively, from operations outside South Africa; and
	•	production from a broad variety of orebody types as well as a variety of open-pit and underground operations.

	•	managing the business;
	•	portfolio optimization and capital deployment; and
	•	growing the business.

	•	Safety & Health. Safety is our first value, which is reflected in all leadership behaviors and is the foundation on which we build all value enhancing processes in the business.
	•	Managing Costs. We intend to manage our input costs taking into account revenues in order to protect margins and returns on capital employed. In particular:

	-	resource development strategies will be applied to ensure we maintain operating margins over time and within the respective life cycle of assets. Initiatives include reviewing, and interventions to improve, mining practices, both at under-performing operations and to further improve performance at other operations;
	-	where we have protected or hedged revenues we will endeavor to protect input costs in order to ensure we protect critical margins; and
	-	maintain core business costs below mean industry costs to ensure appropriate downside risk on cash flow and returns in a volatile price environment. These initiatives include our global procurement efforts.

	•	Revenues. We will seek to ensure that we extract full value from our products by maximizing our revenue through the following initiatives:

	-	we are currently committed to reducing our hedge book in order that our shareholders more fully benefit in gold price upside; and
	-	where possible and appropriate, we support the beneficiation of our products, so as to enhance value creation opportunities.

	•	Optimizing Capital Deployment. We intend to allocate capital to leverage maximum value and returns from existing assets and growth opportunities. With the goal of most efficiently deploying capital effectively across our existing assets, we will review and rank internally each asset on an annual basis as part of the annual business planning process. As part of the initial asset review process we have determined that maximum value leverage will be obtained from:

	-	furthering our key greenfields and brownfields exploration and our brownfields development initiatives as outlined below;
	-	further increasing exploration spend at certain existing mine sites (in addition to those initiatives outlined below) that are believed to have considerable potential beyond that realized to date, particularly at our South American operations (Brazil Mineração, Serra Grande and Cerro Vanguardia) and certain operations in Africa, namely Siguiri and Navachab (in the case of Navachab in addition to increased exploration, the deployment of dense media separation technology that will allow for the processing of lower grade ore and increase gold production is under consideration);
	-	improving mining practices (including improving mine layouts, optimizing and accelerating ore reserve development and reducing ore loss and waste dilution and continued re-capitalization of operations in order to enhance recovered grades and gold production at Obuasi, as well as further accelerating grade control and brownfields exploration as well as continuing to identify appropriate processing routes for certain refractory ores at Geita, in addition to enhancing maintenance systems and skill levels at these currently under-performing operations); and

	-	selling or restructuring certain assets that are deemed no longer consistent with our asset profile or from which assets greater value could be leveraged from sale or restructuring thereby raising cash and deploying it in other value enhancing initiatives.

	•	Asset Management. We are developing a management framework that will seek to ensure that maximum value is attained from each asset in our portfolio. We have developed a “pathway to value” framework to highlight the key value drivers and opportunities at each of our operations. Value optimization opportunities will be identified across the spectrum of scoping potential (exploration), operating strategy and optimization, incorporating ore body capability, mining methods and design and operating performance. These strategies are to be developed through best practices with the aim of achieving an optimal output.
	•	Growing the Business. We seek to further enhance shareholder value by:

	-	leveraging our current ground holdings and asset positions through greenfields exploration and brownfields exploration and development;
	-	selectively pursuing merger and acquisition opportunities; and
	-	maximizing the value of other commodities within our existing and developing asset portfolio.

	•	Greenfields and Brownfields Exploration and Development. We prioritize organic growth through greenfields exploration and brownfields exploration and development leveraging our current ground holding and asset position as the most value efficient path to growth. During 2008, greenfields exploration activities are being undertaken in six countries: Australia, China, Colombia, the Democratic Republic of Congo, the Philippines and Russia. Brownfields exploration and/or brownfields development is currently underway at all of our operations.

	-	Colombia. In Colombia, we have developed a “3 level participation model” comprising our own exploration initiatives, exploration joint ventures with established players (B2Gold, Mineros and Glencore) and equity positions in other exploration companies that are also active in Colombia, such as our 15.9 percent equity interest in, and warrants to acquire additional equity of, B2Gold (we have entered into a binding agreement with B2Gold that has resulted in our holding a 15.9 percent interest in this company, together with warrants which could increase this interest in B2Gold to 26 percent). Our land holding position in Colombia, which includes that held with our joint venture partners, is some 37,500 square kilometers. Our exploration initiatives in Colombia include La Colosa (a large porphyry deposit) where a mineral resource has already been defined where it is intended that a pre-feasibility study (focused on assessing the viability and options for developing an open pit gold mining operation) will commence during 2008. Our most advanced joint venture interest is currently Gramalote in which we hold a 49 percent interest and where a mineral resource has already been defined and exploration continues with a view to concluding a feasibility study by no later than 2010. B2Gold has agreed to acquire the remaining 51 percent interest in Gramalote and will solely fund the remainder of this project to the completion of the feasibility study.
	-	Australia. The Tropicana Joint Venture (in which we have a 70 percent interest) covers approximately 12,000 square kilometers and is located to the east and north-east of Kalgoorlie in western Australia. Exploration has already defined a

		mineral resource and a pre-feasibility study (focused on assessing the viability and options for developing an open pit gold mining operation) is currently being completed. Reconnaissance exploration drilling is also continuing in parallel within the area of the Tropicana Joint Venture.

	-	Democratic Republic of Congo. Exploration activities undertaken in the 10,000 square kilometers Concession 40 tenement (located in Ituri Province in northeastern Democratic Republic of Congo) include the advancement of resource delineation drilling on the known mineralization at the Mongbwalu deposit. A conceptual economic study for the Mongbwalu deposit was completed by the end of 2007 and drill testing of the highest priority regional targets is expected to be undertaken during 2008.

	-	Boddington. The Boddington project, which was approved in March 2006, involves the mining of the basement reserves beneath previously mined oxide pits. Based on the current mine plan, mine life is estimated to be more than 20 years, with attributable life-of-mine gold production expected to be greater than 5.7 million ounces of gold. Production is anticipated to commence at Boddington in late 2008 or early 2009.
	-	Mponeng Ventersdorp Contact Reef. This project, which was approved in February 2007, entails exploiting the Ventersdorp Contact Reef ore reserves at Mponeng located below 120 level. We estimate that this project will add up to 2.5 million ounces to production over the life of the project.
	-	TauTona Carbon Leader Reef. This project, which was approved in July 2003, entails accessing and exploiting the Carbon Leader Reef ore reserves at TauTona located below 120 level. Production was planned to begin in 2009 and we estimated that this project would produce up to 2.5 million ounces of gold from 2009 to 2019. This project is currently under review as it is possible that part of the ore reserves forming this project could also be accessed from the neighboring Mponeng mine in the Mponeng Carbon Leader Reef Project.
	-	Mponeng Carbon Leader Reef. This project aims to exploit the Carbon Leader Reef ore reserves at Mponeng, which are located about 900 meters below the Ventersdorp Contact Reef. Initial estimates are that this project has the potential to contribute up to 7.4 million ounces to production over the life of the project

		(excluding any ore reserves currently attributable to the TauTona Carbon Leader Reef Project) with production from this project estimated to commence in 2018. Ore reserves of 3.4 million ounces were added at Mponeng in 2007 as a result of initiatives related to this project.

	-	Moab Khotsong (Zaaiplaats). A study for phase 2 of the development at Moab Khotsong, which will extend below the level of the currently planned phase 1 operations, was approved and completed during 2007. Ore reserves of 3.8 million ounces were added in 2007 as a result of these initiatives. Studies continue with a view to presenting this project to the directors for consideration and final approval. It is estimated that the project could contribute 4.5 million ounces of gold over the life of the project with production estimated to commence in 2014.
	-	Córrego do Sitio. The Córrego do Sítio Underground Sulphide Project is investigating the viability of exploiting the potential sulphide ore resources of the Córrego do Sítio underground ore bodies. Underground development to further access and explore these ore bodies, as well as trial mining, is in progress. The project is expected to produce approximately 100,000 ounces of gold annually over 14 years and is scheduled to commence production in mid-2011.
	-	Lamego. The Lamego Project currently involves the exploration (primarily via underground development) of the ore bodies located on the Lamego property. This project includes 2 phases. Phase 1 includes a study, which is currently in progress, involving determining the viability of mining parts of these orebodies to produce 450,000 ounces over nine years with production estimated to commence in 2009. Phase 2, which is also currently in progress, involves a three year exploration and underground development program to evaluate the further potential of the Lamego ore bodies beyond phase 1 of the project.
	-	Obuasi Deeps. Exploration and studies continue at Obuasi with a view to developing the large ore body below current working levels.
	-	Obuasi Tailings Sulphide Plant. This project, which was approved in April 2008, entails the construction of a flotation circuit to enable the treatment of lower grade underground sulphide ore (than is being treated at the existing Sulphide Treatment Plant) that currently treats all ore produced from underground operations as well as low grade surface sulphide stockpilings and tailings. The project is anticipated to produce 702,000 ounces of gold over its life and increase annual gold production at Obuasi by between 50,000 and 85,000 ounces per annum. Production via this plant is anticipated to commence in the first half of 2009.
	-	Iduapriem Plant Expansion. This project, which was approved in November 2006, involves the addition and modification of metallurgical treatment and infrastructure at Iduapriem. These initiatives are being implemented to increase plant capacity, improve gold recovery and also reduce operating expenditure. It is estimated that these initiatives will add some 117,000 ounces of production over the life of mine at Iduapriem and increase annual gold production by some 50,000 ounces (albeit over a shorter life of mine assuming no further growth in ore reserves at Iduapriem). The project is expected to be commissioned in the fourth quarter of 2008.
	-	CC&V. The proposed mine life extension project is to include the development of new sources of ore, an extension to the existing heap leach facility, as well as a possible additional heap leach facility. Development drilling, engineering analysis and permitting requirements for this project are currently in progress. The extension of the existing heap leach facility could contribute a further 1.4 million

		ounces of gold production at CC&V. Construction for this project is planned to commence in 2009 with first gold production anticipated in late 2011 or early 2012. The possible additional heap leach facility is also under consideration and this could also further extend the life of CC&V.

	•	Mergers and Acquisitions. We intend to continue to pursue value accretive acquisition opportunities with a view to enhancing our ground holding asset positions and our regional presence and achieving further growth in our business.
	•	Other Commodities. We produce uranium and silver as by-products of our existing gold production and, once the Boddington mine commences gold production, we will also produce copper and silver at this mine. We are increasing our uranium production with the upgrade of the uranium plant which will be commissioned in 2009, and the ramp up of gold production at Moab Khotsong (with a similar increase and ramp up of uranium production from this mine). Other uranium producing initiatives at both our Vaal River and West Wits operations in South Africa are also under consideration. We may also add further copper ore reserves and produce further copper from gold-copper deposits forming part of our exploration portfolio.

 

SUMMARY OF THE RIGHTS OFFERING

ADS rights offering		Each ADS right entitles the holder thereof to subscribe for one offered ADS at the ADS subscription price.
ADS rights agent		The Bank of New York.
Excess applications		Offered shares not taken up in terms of the rights offering (including offered ADSs) will be available for allocation to holders of ADS rights who wish to apply for a greater number of offered ADSs than initially offered to them in the rights offering on the same terms and conditions, subject to certain limitations (“excess applications” or “oversubscription rights”). Excess applications must be made together with initial subscriptions for offered ADSs.
Ex-rights date		The ex-rights date for the ADSs is expected to be May 30, 2008.
		ADSs trading on the NYSE on and after that date are expected to trade without rights.
ADS subscription period		From 9:00 a.m. (New York City time) on June 4, 2008 to 5:00 p.m. (New York City time) on June 23, 2008.
ADS subscription price		The estimated ADS subscription price is $25.28 per offered ADS subscribed. The actual ADS subscription price per offered ADS will be the share subscription price of ZAR194.00 translated into U.S. Dollars on or about June 27, 2008 plus currency conversion fees and the depositary’s issuance fee of $0.03 per new ADS.
		The estimated ADS subscription price is the U.S. dollar equivalent of the share subscription price, using an exchange rate of 7.6735 rands per U.S. dollar (the Federal Reserve Bank of New York’s noon buying rate on May 22, 2008). A subscriber of the offered ADSs must deposit $27.81 per offered ADS subscribed, which represents 110% of the estimated ADS subscription price, upon the exercise of each ADS right. This additional amount over and above the estimated ADS subscription price is to increase the likelihood that the ADS rights agent will have sufficient funds to pay the actual ADS subscription price in light of a possible appreciation of the ZAR against the U.S. dollar between the date hereof and the end of the ADS subscription period and to pay currency conversion fees and the depositary’s issuance fee of $0.03 per new ADS. If the actual U.S. dollar price plus the issuance fee is less than the deposit amount, the ADS rights agent will refund such excess U.S. dollar subscription price to the subscribing ADS rights holder without interest. If there is a deficiency, the ADS rights agent will not issue and deliver the offered ADSs to such subscribing ADS rights holder until it has received payment of the deficiency. The ADS rights agent may sell a portion of your new ADSs to cover the deficiency if not paid within 14 days from notice of the deficiency.

Transfer of ADS rights		Subject to compliance with relevant securities laws, the ADS rights are freely transferable. The ADS rights are expected to trade on the New York Stock Exchange under the symbol “AU RT” from 9:30 a.m. (New York time) on May 29, 2008 until 4:00 p.m. (New York time) on June 20, 2008.
Exercise of ADS rights		Each holder or beneficial owner of ADS rights may exercise all or only part of its ADS rights and may apply for excess offered ADSs. Subscriptions must be received by the ADS rights agent prior to 5:00 p.m. (New York City time) on June 23, 2008.
		Each beneficial owner of ADS rights who wishes to exercise its ADS rights should consult with the financial intermediary through which it holds its ADSs and ADS rights as to the manner, timing and form of exercise documentation, method of payment of the ADS deposit amount and other related matters required to effect such exercise. The financial intermediary with whom the subscription is made may require any person exercising rights to pay or block the ADS deposit amount for the offered ADSs being subscribed for in a deposit account as a condition to accepting the relevant subscription. You are urged to consult your financial intermediary without delay in case your financial intermediary is unable to act immediately.
		We provide further details on how to exercise rights under “The Rights Offering.”
Exercise of ADS rights irrevocable		Any exercise of ADS rights will be irrevocable upon exercise and may not be canceled or modified after such exercise.
Unexercised ADS rights		ADS rights that are not exercised prior to the end of the ADS subscription period will expire valueless without any compensation.
Delivery of offered ADSs		The offered ADSs (other than in respect of excess applications) are expected to be delivered to each offered ADS subscriber (by credit to its book-entry account at the financial intermediary through which it holds the ADS rights or in the form of an ADS certificate by first class mail if it is a holder registered directly with the depositary) on or around July 7, 2008.
		Offered ADSs in respect of excess applications are expected to be delivered to each successful applicant (by credit to its book-entry account at the financial intermediary through which it holds the ADS rights or in the form of an ADS certificate by first class mail if it is a holder or registered directly with the depositary) on or around Friday, July 11, 2008.
U.S. information agent		Innisfree M&A Incorporated
ADS holder helpline number		1-877-800-5190 (toll-free)

Announcement of rights offering		May 23, 2008
Trading of ADS rights commences on the NYSE		May 29, 2008
ADS ex-rights date		May 30, 2008
ADS record date		Close of business on June 3, 2008
Notice to ADS holders of ADS rights to which they are entitled		After June 3, 2008
Notice to brokers/dealers of terms of ADS rights offering		After June 3, 2008
Notice to ADS holders of terms of ADS rights offering		After June 3, 2008
ADS subscription period commences		9:00 a.m. on June 4, 2008
Trading of ADS rights ceases on the NYSE		June 20, 2008
ADS subscription period ends		5:00 p.m. on June 23, 2008
Expected date for issuance and delivery of the offered ADSs		On or around July 7, 2008
Expected date for issuance and delivery of offered ADSs in respect of excess applications		On or around July 11, 2008

	(1)	Other than dates prior to the date hereof, all dates are expected and subject to change. No assurance can be given that the issuance and delivery of the offered ADSs will not be delayed.

Share rights		Each share right entitles the holder thereof to subscribe for one offered share at the share subscription price.
		Subscriptions will be accepted for a whole number of offered shares only, although holders of share rights may exercise all or only part of their share rights.
Excess applications		Offered shares not taken up in terms of the rights offering (including offered ADSs) will be available for allocation to holders of share rights who wish to apply for a greater number of offered shares than initially offered to them in the rights offering on the same terms and conditions, subject to certain limitations. Applications for excess offered shares must be made together with initial subscriptions for offered shares.
Ex-rights date		The ex-rights date for the ordinary shares is expected to be June 2, 2008. Ordinary shares trading on the JSE on and after that date are expected to trade without rights.
Share subscription period		From 9:00 a.m. (Johannesburg time) on June 9, 2008 to 12:00 p.m. (Johannesburg time) on July 4, 2008.
Share subscription price		ZAR194.00 per offered share, which in U.S. dollars was equivalent to $25.28 on May 22, 2008 using an exchange rate of 7.6735 rands per U.S. dollar (the Federal Reserve Bank of New York’s noon buying rate on May 22, 2008).
Transfer of share rights		Subject to compliance with relevant securities laws, the share rights are freely transferable and are expected to trade on the JSE under the symbol “ANGN” from 9:00 a.m. (Johannesburg time) on June 2, 2008 to 5:00 p.m. (Johannesburg time) on June 27, 2008.
Exercise of share rights		Each holder of share rights may exercise all or only part of its share rights and may apply for excess offered shares. Subscriptions must be received prior to 12:00 p.m. (Johannesburg time) on July 4, 2008. Dematerialized shareholders are urged to consult their CSDP or broker without delay regarding the procedure they need to follow for the acceptance, sale or renunciation of their rights offer entitlement without delay in case their CSDP or broker is unable to act immediately.
		We provide further details on how to exercise rights under “The Rights Offering.”
Exercise of share rights irrevocable		Any exercise of share rights will become irrevocable upon exercise and may not be canceled or modified after such exercise.
Unexercised share rights		Share rights that are not exercised prior to the end of the share subscription period will expire valueless without any compensation.
Delivery of offered shares		Share certificates to be issued to certificated shareholders pursuant to the rights offering are expected to be posted to

		persons entitled thereto, by registered post in South Africa or by first class post in the United Kingdom, at the risk of the shareholders concerned, on or around Monday, July 7, 2008 and, in the case of offered shares in respect of excess applications, on or around Friday, July 11, 2008.
		Dematerialized shareholders are expected to have their safe custody accounts updated at their CSDP or broker in respect of the rights offering entitlement issued to them on or around Monday, July 7, 2008 and, in the case of offered shares in respect of excess applications, on or around Friday, July 11, 2008. CDSP will effect payment on a delivery against payment method in respect of holders of our dematerialized shares.
Start of trading in new ordinary shares		We expect that the offered shares will be admitted to listing and trading on the JSE on June 30, 2008 under the symbol “ANG”. However, we can give no assurance that such issuance and delivery or admission to listing and trading will not be delayed.
Information agent		Innisfree M&A Incorporated
Ordinary shareholder helpline number		In the United States and Canada 1-877-800-5190 (toll-free)

Announcement of rights offering		May 23, 2008
Share ex-rights date		June 2, 2008
Share subscription period for exercise of rights commences		June 9, 2008
Trading of share rights commences on the JSE		June 2, 2008
Trading of share rights ceases on the JSE		5:00 p.m. on June 27, 2008
Expected date for commencement of trading of new ordinary shares On the JSE		On or around June 30, 2008
Expiration of subscription period		12:00 p.m. July 4, 2008
Expected date of issue of all offered shares		On or around July 7, 2008
Expected date for delivery of offered shares in respect of excess applications		On or around July 11, 2008

	(1)	Other than dates prior to the date hereof, all dates are expected and subject to change. No assurance can be given that the issuance and delivery of the offered shares will not be delayed.

Risk Factors		Investing in our ordinary shares or ADSs involves risks. See “Risk Factors” beginning on page S-21.
Selling Security Holder		Anglo South Africa Capital (Proprietary) Limited, a wholly-owned indirect subsidiary of Anglo American plc. As of May 29, 2008, the selling security holder owned 16.6% of our total ordinary share capital. See “The Selling Security Holder”.
Lock-up of Company		We have agreed with the underwriters in the rights offering, subject to certain exceptions, not to offer or sell any of our ordinary shares (including in the form of ADSs) and securities that are substantially similar to our ordinary shares, including any securities that are convertible or exchangeable into our ordinary shares, for a period of 180 days after the date of the settlement of the rights offering.
Lock-up of Directors		Our directors expect to agree with the underwriters in the rights offering, subject to certain exceptions, not to offer or sell any of our ordinary shares (including in the form of ADSs) and securities that are substantially similar to our ordinary shares, including any securities that are convertible or exchangeable into our ordinary shares, for a period of 180 days after the date of the delivery of any remaining offered shares, or if it is determined that there are no remaining offered shares, a date shortly after such determination is made.
Lock-up of the Selling Security Holder		Pursuant to a registration rights agreement between us and the selling security holder, dated as of March 23, 2006, or the registration rights agreement, the selling security holder has agreed not to offer, sell or allot any of our ordinary shares or other securities that are convertible into or exchangeable for, or that represent the right to receive, our ordinary shares for a 90 day period from July 7, 2008 or, if other than July 7, 2008, the date on which we first allot and issue offered shares to subscribers thereof upon the exercise of rights.

			Year ended December 31,																				Three months ended March 31,
			2003(1)(2)(3)				2004(4)(5)				2005				2006(6)				2007(7)				2007				2008
																							(unaudited)				(unaudited)
			(in $ millions, except per share amounts)
Consolidated statement of income
Sales and other income				1,670				2,151				2,485				2,715				3,095				734				894
Product sales(8)				1,641				2,096				2,453				2,683				3,048				723				884
Interest, dividends and other				29				55				32				32				47				11				10
Costs and expenses				1,329				2,176				2,848				2,811				3806				699				1,087
Operating costs(9)				1,135				1,517				1,842				1,785				2,167				482				525
Royalties				11				27				39				59				70				18				25
Depreciation, depletion and amortization				247				445				593				699				655				140				147
Impairment of assets				75				3				141				6				1				—				—
Interest expense				28				67				80				77				75				16				21
Accretion expense				2				8				5				13				20				4				5
Loss/(profit) on sale of assets, loans and indirect taxes				(55	)			(14	)			(3	)			(36	)			10				(4	)			(11	)
Mining contractor termination costs				—				—				9				—				—				—				—
Non-hedge derivative (gain)/loss				(114	)			123				142				208				808				43				375
Income/(loss) from continuing operations before income tax, equity income, minority interests and cumulative effect of accounting change				341				(25	)			(363	)			(96	)			(711	)			35				(193	)
Taxation (expense)/benefit				(143	)			132				121				(122	)			(118	)			(40	)			5
Minority interest				(17	)			(22	)			(23	)			(29	)			(28	)			(7	)			(12	)
Equity income in affiliates				71				23				39				99				41				16				8
Income/(loss) from continuing operations before cumulative effect of accounting change				252				108				(226	)			(148	)			(816	)			4				(192	)
Discontinued operations				(2	)			(11	)			(44	)			6				2				(1	)			—
Income/(loss) before cumulative effect of accounting change				250				97				(270	)			(142	)			(814	)			3				(192	)
Cumulative effect of accounting change				(3	)			—				(22	)			—				—				—				—
Net income/(loss) — applicable to ordinary stockholders				247				97				(292	)			(142	)			(814	)			3				(192	)
Other financial data
Basic earnings/(loss) per ordinary share (in $)(10)
From continuing operations				1.13				0.43				(0.85	)			(0.54	)			(2.93	)			0.01				(0.69	)
Discontinued operations				(0.01	)			(0.04	)			(0.17	)			0.02				(0.01	)			—				—
Before cumulative effect of accounting change				1.12				0.39				(1.02	)			(0.52	)			(2.92	)			0.01				(0.69	)
Cumulative effect of accounting change				(0.01	)			—				(0.08	)			—				—				—				—
Net income/(loss) — applicable to ordinary stockholders				1.11				0.39				(1.10	)			(0.52	)			(2.92	)			0.01				(0.69	)
Diluted earnings/(loss) per ordinary share (in $)(10)
From continuing operations				1.13				0.42				(0.85	)			(0.54	)			(2.93	)			0.01				(0.69	)
Discontinued operations				(0.01	)			(0.04	)			(0.17	)			0.02				(0.01	)			—				—
Before cumulative effect of accounting change				1.12				0.38				(1.02	)			(0.52	)			(2.92	)			0.01				(0.69	)
Cumulative effect of accounting change				(0.01	)			—				(0.08	)			—				—				—				—
Net income/(loss) — applicable to ordinary stockholders				1.11				0.38				(1.10	)			(0.52	)			(2.92	)			0.01				(0.69	)
Dividend per ordinary share (cents)				133				76				56				39				44				32				7

		As at December 31,																As at
		2003(1)(2)(3)				2004(4)(5)			2005			2006(6)			2007(7)			March 31, 2008
																		(unaudited)
		(in $ millions, except share and per share amounts)
Consolidated balance sheet data
Cash and cash equivalents and restricted cash			479				302			204			482			514			526
Other current assets			822				1,115			1,197			1,394			1,599			1,614
Property, plants and equipment, deferred stripping, and acquired properties, net			3,037				6,654			6,439			6,266			6,807			6,548
Goodwill and other intangibles, net			226				591			550			566			591			603
Materials on the leach pad (long-term)			7				22			116			149			190			206
Other long-term assets, derivatives, deferred taxation assets and other long-term inventory			772				712			607			656			680			704
Total assets			5,343				9,396			9,113			9,513			10,381			10,201
Current liabilities			1,116				1,469			1,874			2,467			3,795			5,124
Provision for environmental rehabilitation			124				209			325			310			394			356
Deferred taxation liabilities			789				1,518			1,152			1,275			1,345			1,207
Other long-term liabilities, and derivatives			1,194				2,295			2,539			2,092			2,232			1,285
Minority interest			52				59			60			61			63			70
Stockholders’ equity			2,068				3,846			3,163			3,308			2,552			2,159
Total liabilities and stockholders’ equity			5,343				9,396			9,113			9,513			10,381			10,201
Capital stock (exclusive of long-term debt and redeemable preferred stock)			9				10			10			10			10			10
Number of ordinary shares as adjusted to reflect changes in capital stock			223,136,342				264,462,894			264,938,432			276,236,153			277,457,471			277,745,007
Net assets			2,120				3,905			3,223			3,369			2,615			2,229

		Year ended December 31,												Three months ended March 31,
		2005				2006				2007				2007			2008
Total attributable gold production (000 ounces)(1)			6,166				5,635				5,477				1,326			1,196
Total cash costs ($ per ounce)(1)(2)			281				321				367				n/a			n/a
Total production costs ($ per ounce)(1)(2)			398				452				504				n/a			n/a
Production costs ($ million)			1,642				1,539				1,917				n/a			n/a
Capital expenditure ($ million)(1)			722				817				1,059				196			257

	(1)	Including equity accounted joint ventures for management reporting purposes.
	(2)	“Total cash costs per ounce” and “total production costs per ounce” have been determined using industry standards promulgated by the Gold Institute and are not measures under U.S. GAAP. We believe that total cash costs and total production costs per ounce, expressed in the aggregate or on a mine-by-mine basis, are useful indicators to investors and management of a mine’s performance because they provide:

	•	an internal benchmark of performance to allow for comparison against other mines, both within our group and of other gold mining companies.

 

This section describes some of the risks that could materially affect an investment in the ordinary shares being offered in the rights offering. You should read these risk factors in conjunction with the detailed discussion of risk factors starting on page 15 in our Form 20-F, and those identified in our future filings with the SEC, incorporated herein by reference. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business operations.

 

Risks related to the gold mining industry generally

 

The profitability of our operations, and the cash flows generated by these operations, are significantly affected by changes in the market price for gold.

 

The market price for gold can fluctuate widely. These fluctuations are caused by numerous factors beyond our control, including:

 

 

The price of gold is often subject to sharp, short-term changes resulting from speculative activities. While the overall supply of and demand for gold can affect its market price, because of the considerable size of above-ground stocks of the metal in comparison to other commodities, these factors typically do not affect the gold price in the same manner or degree that the supply of and demand for other commodities tends to affect their market price.

 

The following table presents the annual high, low and average afternoon fixing prices over the past ten years, expressed in dollars, for gold per ounce on the London Bullion Market:

 

Source of data: Metals Week, Reuters and London Bullion Market Association.

 

On May 20, 2008, the afternoon fixing price of gold on the London Bullion Market was $907 per ounce.

 

In addition to the spot price of gold, a portion of our gold sales is determined at prices in accordance with the various hedging contracts that we have entered into, or may enter into, with various gold hedging counterparts.

 

If revenue from gold sales falls below the cost of production for an extended period, we may experience losses and be forced to curtail or suspend some or all of our capital projects or existing operations, particularly those operations having operating costs that are flexible to such short- to medium-term curtailment or closure, or change our past dividend payment policies. In addition, we would have to assess the economic impact of low gold prices on our ability to recover any losses that may be incurred during that period and on our ability to maintain adequate cash reserves.

 

The profitability of our operations, and the cash flows generated by these operations, are significantly affected by the fluctuations in the price of input production factors, many of which are linked to the price of oil and steel.

 

Fuel, power and consumables, including diesel, heavy fuel oil, chemical reagents, explosives and tires, which are used in mining operations form a relatively large part of the operating costs of any mining company. The cost of these consumables is linked, to a greater or lesser extent, to the price of oil.

 

We have estimated that for each $1 per barrel rise in the oil price, the average cash costs of all our operations increases by approximately $0.61 per ounce with the cash costs of certain of our mines, which are more dependent on fuel, being more sensitive to changes in the price of oil.

 

Furthermore, the cost of steel, which is used in the manufacture of most forms of fixed and mobile mining equipment, is also a relatively large contributor to the operating costs and capital expenditure of a mining company.

 

Fluctuations in the price of oil and steel have a significant impact upon operating cost and capital expenditure estimates and, in the absence of other economic fluctuations, could result in significant changes in the total expenditure estimates for new mining projects or render certain projects non-viable. We have no influence over the price of fuel, chemical reagents, explosives, steel and other commodities used in our mining activities.

 

Our operations and development projects could be adversely affected by shortages of, as well as the lead times to deliver, strategic spares, critical consumables, heavy mining equipment and metallurgical plant.

 

Due to the significant increase in the world’s demand for commodities, the global mining industry is experiencing an increase in production capacity both in terms of expansions at existing, as well as the development of new, production facilities.

 

This increase in expansion capacity has taken place, in certain instances, without a concomitant increase in the capacity for production of certain strategic spares, critical consumables and mining and processing equipment used to operate and construct mining operations, resulting in shortages of and an increase in the lead times to deliver these items.

 

In particular, we and other gold mining companies have experienced shortages in critical consumables like tires for mobile mining equipment, as well as certain critical spares for both mining equipment and processing plants including, for example, gears for the ball-mills. In addition, we have experienced an increase in delivery times for these and other items. These shortages have also resulted in unanticipated increases in the prices of certain of these and other items. Shortages of critical spares, consumables and equipment result in delays and production shortfalls. Increases in

prices result in an increase in both operating costs and the capital expenditure to develop mining operations.

 

While suppliers and equipment manufacturers may increase capacity to meet the increased demand and therefore alleviate both shortages of, and time to deliver, strategic spares, critical consumables and mining and processing equipment, individually the companies have limited influence over manufacturers and suppliers. Consequently, shortages and increased lead times in delivery of strategic spares, critical consumables, heavy mining and certain processing equipment could have an adverse impact upon our results of operations and our financial condition.

 

Gold companies face many risks related to their operations (including their exploration and development activities) that may adversely affect their cash flows and overall profitability.

 

Uncertainty and cost of mineral exploration and acquisitions

 

Exploration activities are speculative and are often unproductive. These activities also often require substantial expenditure to:

 

 

Once gold mineralization is discovered it can take several years to determine whether ore reserves exist. During this time the economic feasibility of production may change owing to fluctuations in factors that affect revenue, as well as cash and other operating costs.

 

We evaluate from time to time the acquisition of ore reserves, development properties and operating mines, either as stand-alone assets or as part of companies. Our decisions to acquire these properties have historically been based on a variety of factors including historical operating results, estimates of and assumptions regarding the extent of ore reserves, cash and other operating costs, gold prices and projected economic returns and evaluations of existing or potential liabilities associated with the property and its operations and how these may change in the future. Other than historical operating results, all of these parameters are uncertain and have an impact upon revenue, cash and other operating issues, as well as the uncertainties related to the process used to estimate ore reserves. In addition, there is intense competition for the acquisition of attractive mining properties.

 

As a result of these uncertainties, the exploration programs and acquisitions engaged in by us may not result in the expansion or replacement of the current production with new ore reserves or operations. This could adversely affect the results of our operations and our financial condition.

 

Development risks

 

Our profitability depends, in part, on the actual economic returns and the actual costs of developing mines, which may differ significantly from our current estimates. The development of our mining projects may be subject to unexpected problems and delays.

 

Our decision to develop a mineral property is typically based, in the case of an extension or, in the case of a new development, on the results of a feasibility study. Feasibility studies estimate the expected or anticipated project economic returns.

 

These estimates are based on assumptions regarding:

 

 

Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such studies and estimates. Operating costs and capital expenditure are determined particularly by the costs of the commodity inputs, including the cost of fuel, chemical reagents, explosives, tires and steel that are consumed in mining activities and credits from by-products. There are a number of uncertainties inherent in the development and construction of an extension to an existing mine, or in the development and construction of any new mine. In addition to those discussed above these uncertainties include:

 

 

The costs, timing and complexities of mine development and construction can increase because of the remote location of many mining properties. New mining operations could experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production could occur. Finally, operating cost and capital expenditure estimates could fluctuate considerably as a result of fluctuations in the prices of commodities consumed in the construction and operation of mining projects. Accordingly, our future development activities may not result in the expansion or replacement of current production with new production, or one or more of these new production sites or facilities may be less profitable than currently anticipated or may not be profitable at all.

 

The shortage of skilled labor may also impede our exploration projects.

 

Ore reserve estimation risks

 

We undertake annual revisions to our ore reserve estimates based upon actual exploration and production results, depletion, new information on geology and fluctuations in production, operating and other costs and economic parameters such as gold price and exchange rates. Ore reserve estimates are not precise calculations and are dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. These factors may result in reductions in our ore reserve estimates, which could adversely affect the life-of-mine plans and consequently the total value of our mining asset base and, as a result, have an adverse effect upon the market price of our ordinary shares and ADSs.

 

Production or mining industry risks

 

Gold mining is susceptible to numerous events that may have an adverse impact on a gold mining business, its ability to produce gold and meet its production targets. These events include, but are not limited to:

 

 

Seismic activity is of particular concern to the gold mining industry in South Africa, in part because of the large percentage of deep-level gold mines. To understand and manage this risk, we use sophisticated seismic and rock mechanics technologies.

 

Despite the implementation of this technology and modifications to mine layouts and support technology with a view to minimizing the incidence and impact of seismic activity, seismic events have in the past, and may in the future, cause the death of, or personal injury to, miners and other employees, as well as the loss of mining equipment, damage to or destruction of mineral properties or production facilities, production disruptions, monetary losses, environmental damage and potential legal liabilities both within South Africa and elsewhere where seismic activity may be a factor. As a result, these events may have a material adverse effect on our operational results and our financial condition. For example, in the fourth quarter of 2007 we encountered unanticipated delays and a shortfall in production of approximately 55,000 ounces as a result of these events.

 

Gold mining companies are increasingly required to consider and ensure the sustainable development of, and provide benefits to, the communities and countries in which they operate.

 

As a consequence of public concern about the perceived ill effects of economic globalization, business generally and in particular large multinational corporations face increasing public scrutiny of their activities.

 

These businesses are under pressure to demonstrate that, as they seek to generate satisfactory returns on investment to shareholders, other stakeholders – including employees, communities surrounding operations and the countries in which they operate – benefit, and will continue to benefit from these commercial activities, which are also expected to minimize or eliminate any damage to the interests of those stakeholders.

 

These pressures tend to be applied most strongly against companies whose activities are perceived to have a high impact on their social and physical environment. The potential consequences

of such pressures, especially if not effectively managed, include reputational damage, legal suits and social spending obligations. All of these factors could have a material adverse effect on our results of operations and our financial condition.

 

The South African Department of Minerals and Energy has embarked on an audit strategy with the objective of helping mines to develop programs to improve health and safety. Audits have been conducted and a number of working place compliance stoppages have occurred. These instances have had a short-term adverse impact on gold production. Future stoppages could have a similar negative impact on production.

 

Gold mining operations are subject to extensive health and safety laws and regulations.

 

Gold mining operations are subject to a variety of industry-specific health and safety laws and regulations depending upon the jurisdiction in which they operate. These laws and regulations are formulated to improve and to protect the safety and health of employees. If these laws and regulations were to change and, if as a result, material additional expenditure were required to comply with such new laws and regulations, it could adversely affect our results of operations and our financial condition.

 

Gold mining companies are subject to extensive environmental laws and regulations.

 

Gold mining companies are subject to extensive environmental laws and regulations in the various jurisdictions in which they operate. These regulations establish limits and conditions on gold producers’ ability to conduct their operations. The cost of our compliance with environmental laws and regulations has been significant and is expected to continue to be significant.

 

Gold mining companies are required to close their operations and rehabilitate the lands that they mine in accordance with environmental laws and regulations. Estimates of the total ultimate closure and rehabilitation costs for gold mining operations are significant and based principally on current legal and regulatory requirements that may change materially. Environmental liabilities are accrued when they are known, probable and can be reasonably estimated. Increasingly, regulators are seeking security in the form of cash collateral or bank guarantees in respect of environmental obligations, which could have an adverse effect on our financial condition.

 

Environmental laws and regulations are continually changing and are generally becoming more restrictive. If our environmental compliance obligations were to change as a result of changes in the laws and regulations or in certain assumptions we make to estimate liabilities, or if unanticipated conditions were to arise in our operations, our expenses and provisions would increase to reflect these changes. If material, these expenses and provisions could adversely affect our results of operations and our financial condition.

 

Risks related to our operations

 

We face many risks related to our operations that may affect our cash flows and overall profitability.

 

We use gold hedging instruments and have entered into long term sales contracts, which may prevent us from realizing all potential gains resulting from subsequent commodity price increases in the future. Our reported financial condition could be adversely affected as a result of the need to fair value all of our hedge contracts.

 

We currently use gold hedging instruments to fix the selling price of a portion of our anticipated gold production and to protect revenues against unfavorable gold price and exchange rate movements. While the use of these instruments may protect against a drop in gold prices and exchange rate movements, it will do so for only a limited period of time and only to the extent that the hedge remains in place. The use of these instruments may also prevent us from fully realizing the

positive impact on income from any subsequent favorable increase in the price of gold on the portion of production covered by the hedge and of any subsequent favorable exchange rate movements.

 

A significant number of our forward sales contracts are not treated as derivatives and fair valued on the financial statements as they fall under the normal purchase sales exemption. Should we fail to settle these contracts by physical delivery, then we may be required to account for the fair value of a portion, or potentially all of, the existing contracts in the financial statements. This could adversely affect our reported financial condition.

 

We intend to significantly reduce our gold hedging position following the rights offering, which will substantially reduce our protection against future declines in the market price of gold.

 

We have traditionally used gold hedging instruments to protect the selling price of some of our anticipated sales against declines in the market price of gold. The use of these instruments has prevented us from fully participating in the significant increase in the market price of gold in recent years. Since 2001, we have been reducing our hedge commitments through hedge buy-backs (limited to non-hedge derivatives), physical settlement of maturing contracts and other restructurings in order to provide greater participation in a rising gold price environment.

 

Notwithstanding the steps we have taken to date, our gold hedging position has continued to have a significantly adverse effect upon our financial performance. In order to address this, we intend to procure early settlement of certain contracts otherwise due to mature in 2009 and 2010 during the course of 2008 in addition to settling contracts due to mature in 2008. In addition to the settlement of the aforementioned contracts during 2008, we also intend to restructure some of the remainder of our hedge book in order to achieve greater participation in the spot price for gold beyond 2009. For a description of our plans to reduce our gold hedging position, see “Purpose of the Rights Offering and Use of Proceeds”. As a result of these measures, we expect to have substantially less protection against declines in the market price of gold during 2008 and later years compared to 2007.

 

We face certain risks and uncertainties in the execution of our planned gold hedge restructuring.

 

Through the planned gold hedge restructuring, we intend to significantly reduce our gold hedging position by procuring early settlement of certain contracts otherwise due to mature in 2009 and 2010 during the course of 2008 in addition to settling contracts already due to mature in 2008. In addition to the settlement of the aforementioned contracts during 2008, we also intend to restructure some of the remainder of our hedge book in order to achieve greater participation in the spot price for gold beyond 2009. The exact nature and extent and execution of these processes will depend upon prevailing and anticipated market conditions at the time of restructuring, particularly prevailing gold prices and exchange rates and other relevant economic factors. Should these conditions become unfavorable at any stage during the restructuring, this may delay or frustrate the implementation of the restructuring. In addition, should the outlook for gold prices, exchange rates and other economic factors materially change, it is possible that our plans for the execution of the gold hedge restructuring may be modified so as to minimize the adverse impact from such changes or maximize the benefits from them.

 

Furthermore, the execution of the gold hedge restructuring may depend on or be affected by our ability to obtain consents from hedge counterparties and our lenders. If we are not able to successfully execute the planned gold hedge restructuring then we will be prevented from fully participating in higher gold prices should such gold prices continue to prevail.

 

We also continue to give consideration to the early settlement of contracts not currently recorded on balance sheet (normal purchase normal sale exemption (“NPSE”)) by means of early physical delivery. Such early physical settlement, if it were to occur, would result in a significant adverse impact on our 2008 recorded revenues in our income statement, as sales that would have

otherwise been executed at the spot price of gold will be replaced with sales based on the earlier contracted prices of such NPSE contracts that are settled during the year. Furthermore should we conclude that such early physical settlement of NPSE contracts represents a tainting event, we would be required to recognize on balance sheet the fair value of a portion of, or potentially all of the existing NPSE contracts, which would result in a significant adverse impact on our financial statements. No such conclusion has yet been made by us and we are still considering the potential impact of any such transaction.

 

Some of our power suppliers have forced us to halt or curtail activities at our mines, due to severe power disruptions. Power stoppages, fluctuations and power cost increases may adversely affect our results of operations and our financial condition.

 

In South Africa, our mining operations are dependent upon electrical power generated by the State utility, Eskom. As a result of an increase in demand exceeding available generating capacity, Eskom has warned that the country could face disruptions in electrical power supply. At the start of 2008, as a result of substantial unplanned maintenance at Eskom’s power stations, as well as higher than usual seasonal rainfall adversely affecting Eskom’s coal stockpiles, Eskom’s generating capacity was constrained and reduced. As a result, the incidence of power outages in South Africa increased substantially to the point that, on Friday, January 25, 2008, Eskom warned that it could no longer guarantee the availability of its supply of electrical power to the South African mining industry. Consequently, we, along with other mining companies with South African operations, were forced temporarily to suspend mining operations at our South African mines. Following meetings between industry-wide representatives, including ourselves, and Eskom, agreement was reached whereby mines were able to resume their power consumption at 90 percent of average capacity in return for Eskom guaranteeing a more normal power supply, including undertakings to more reliably warn companies when power outages may occur. Mining operations resumed on Wednesday, January 30, 2008 at our South African mines, although operations continued to be constrained by a power capacity limitation imposed by Eskom. By mid-first quarter of 2008, power supply had increased to around 96.5 percent and our South African operations were once again able to operate at full capacity as a result of the various energy efficiency initiatives implemented at our South African operations ongoing and future production levels will depend on an ongoing stable power supply consistent with Eskom’s undertaking as well as whether we are able to continue to implement, and increase, its various energy efficiency initiatives. The extent to which the power capacity limitation will result in lost production will depend on a number of factors, including the success of our energy savings initiatives; accordingly we are unable to estimate our lost production as a result of the power capacity limitations. Eskom has also advised us that it intends to increase power tariffs significantly. Should the power outages continue to increase or should we be unable to achieve our production or cost targets due to the current constraints, any additional power outages or any power tariff increases, then our future profitability and our financial condition may be adversely impacted.

 

All of our mining operations in Ghana are dependent for their electricity supply on hydro-electric power supplied by the Volta River Authority (“VRA”) an entity controlled by the government of Ghana. Most of this electrical power is hydro-generated electricity, although we also have access to VRA electricity supply from a recently constructed smaller thermal plant. The VRA’s principal electricity generating facility is the Akosombo Dam and during periods of below average inflows from the Volta reservoir, electricity supplies from the Akosombo Dam may be curtailed, as occurred in 1998, 2006 and the first half of 2007. In addition, during periods of limited electricity availability, the national power system is subject to system disturbances and voltage fluctuations, which can damage the group’s equipment. The VRA also obtains power from neighboring Cote d’Ivoire, which has intermittently experienced some political instability and civil unrest. These factors, including increased power demand from other users in Ghana, may cause interruptions in our power supply to our operations in Ghana or result in increases in the cost of power even if they do not interrupt supply. Consequently, these factors may adversely affect our results of operations and our financial condition. In order to address this problem and to supplement the power generated by the VRA, we have,

together with the other three principal gold producers in Ghana, acquired (and equally fund) an 85 megawatt, diesel-fired, power plant that could be converted to gas supply once the anticipated West African Gas Pipeline is developed. To further reduce dependence on hydro-electric power, which may be impacted by low rainfall, the VRA is increasing its thermal power generation capacity by constructing a 126 megawatt thermal plant at Tema.

 

Our mining operations in Guinea, Tanzania and Mali are dependent on power supplied by outside contractors and supplies of fuel being delivered by road. Our power supply has been disrupted in the past and it has suffered production losses as a result of equipment failure.

 

Contracts for sale of uranium at fixed prices could affect our operating results and financial condition.

 

We have entered into contracts for the sale of uranium produced by some of our South African operations and may therefore be prevented from realizing all potential gains from an increase in uranium prices to the extent that our future production is covered by such contracts, or should we not produce sufficient quantities of uranium to cover such contracts, we may need to procure or borrow uranium in the market to meet any shortfall which could adversely affect our results of operations and our financial condition.

 

Given the uncertainty relating to availability of power, and the impact power constraints may have on uranium production, we are in negotiations to reschedule some of our uranium contracts and depending on the outcome of these negotiations, may have to buy uranium on the open market to fulfill our contractual obligations. For example, in 2007, we purchased 400,000 pounds of uranium at a cost of around $31 million.

 

Foreign exchange fluctuations could have a material adverse effect on our operating results and financial condition.

 

Gold is principally a dollar-priced commodity, and most of our revenues are realized in or linked to dollars while production costs are largely incurred in the applicable local currency where the relevant operation is located. The weakening of the dollar, without a corresponding increase in the dollar price of gold against these local currencies, results in lower revenues and higher production costs in dollar terms.

 

Conversely, the strengthening of the dollar, without a corresponding decrease in the dollar price of gold against these local currencies yields significantly higher revenues and lower production costs in dollar terms. If material, these exchange rate movements may have a material effect on our operational results.

 

Since June 2002, the weakening of the dollar against the South African rand (up until the second half of 2007 when the South African rand began to also weaken against the dollar), the Brazilian real, the Argentinean peso and the Australian dollar has had a negative impact upon our profitability. Conversely, in certain prior years, the devaluation of these local currencies against the dollar has had a significant positive effect on the profitability of our operations. In 2007, 2006, and 2005, we derived approximately 71 percent, 73 percent and 67 percent, respectively, of our revenues from these countries and incurred approximately 62 percent, 61 percent and 63 percent, respectively, of production costs in these local currencies.

 

In 2007, the weakening of the dollar against these local currencies in which we operate continued to increase total cash costs. A one percent strengthening of these local currencies against the dollar will result in an increase of total cash costs incurred of nearly $3 per ounce, or one percent. These impacts were partially offset by the increase in the dollar price of gold, which increase was to some extent a function of dollar weakness. In addition, production costs in South African rand, Brazilian real, Argentinean peso and Australian dollar terms were only modestly offset by the effect of

exchange rate movements on the price of imports denominated in dollars, as imported products comprise a small proportion of production costs in each of these countries.

 

A small proportion of our hedges are denominated in South African rands, Australian dollars and Brazilian real, which may partially offset the effect of the U.S. dollar’s strength or weakness on our profitability.

 

In addition, due to our global operations and local foreign exchange regulations, some of our funds are held in local currencies, such as the South African rand and Australian dollar.

 

The dollar value of these currencies may be affected by exchange rate fluctuations. If material, exchange rate movements may adversely affect our financial condition.

 

Our level of indebtedness may adversely affect our business.

 

As of December 31, 2007, we had gross borrowings of around $1.9 billion (including bonds). This level of indebtedness could have adverse effects on our flexibility to do business. Under the terms of our borrowing facilities from our banks we are obliged to meet certain financial and other covenants. We expect to meet these covenants and to be able to pay principal and interest on our debt by utilizing the cash flows from operations. Our ability to continue to do so will depend upon our future financial performance which will be affected by our operating performance as well as by financial and other factors, certain of which are beyond our control. We may be required to utilize a large portion of our cash flow to pay the principal and interest on our debt which will reduce the amount of funds available to finance existing operations, the development of new organic growth opportunities and further acquisitions.

 

Our level of indebtedness may make us vulnerable to economic cycle downturns, which are beyond our control, because during such downturns, we cannot be certain that our future cash flows will be sufficient to allow us to pay principal and interest on our debt and also to meet our other obligations. Should the cash flow from operations be insufficient, we could breach our financial and other covenants and may be required to refinance all or part of our existing debt, use existing cash balances, issue additional equity or sell assets. We cannot be sure that we will be able to do so on commercially reasonable terms, if at all.

 

We intend to redeem our ZAR2 billion corporate bond (which matures in August 2008) and refinance our $1 billion convertible bond (which matures in February 2009) before these bonds mature. We cannot give assurance that we will be able to do so on commercially reasonable terms, if at all.

 

Inflation may have a material adverse effect on our results of operations.

 

Most of our operations are located in countries that have experienced high rates of inflation during certain periods.

 

Because we are unable to control the market price at which we sell the gold we produce (except to the extent that we enter into forward sales and other derivative contracts), it is possible that significantly higher future inflation in the countries in which we operate may result in an increase in future operational costs in local currencies, without a concurrent devaluation of the local currency of operations against the dollar or an increase in the dollar price of gold. This could have a material adverse effect upon our results of operations and our financial condition.

 

While none of our specific operations is currently materially adversely affected by inflation, significantly higher and sustained inflation in the future, with a consequent increase in operational costs, could result in operations being discontinued or reduced or rationalized at higher cost mines.

 

Our new order mining rights in South Africa could be suspended or cancelled should we breach, and fail to remedy such breach of, our obligations in respect of the acquisition of these rights.

 

Our rights to own and exploit mineral reserves and deposits are governed by the laws and regulations of the jurisdictions in which the mineral properties are located. Currently, a significant portion of its mineral reserves and deposits are located in South Africa.

 

The Mineral and Petroleum Resources Development Act (“MPRDA”) vests custodianship of South Africa’s mineral rights in the State. The State issues prospecting rights or mining rights to applicants. Prospecting, mining and mineral rights formerly regulated under the Minerals Act 50 of 1991 and common law are now known as old order mining rights and the transitional arrangements provided in Schedule II to the MPRDA give holders of such old order mining rights the opportunity to convert their old order mining rights into new order mining rights within specified time frames.

 

The Department of Minerals and Energy (“DME”) has published, pursuant to the MPRDA, the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (the “Charter”). Compliance with the Charter, measured using a designated Scorecard, requires that every mining company achieve 15 percent ownership by historically disadvantaged South Africans (“HDSAs”) of its South African mining assets by May 1, 2009, and 26 percent ownership by May 1, 2014 and achieve participation by HDSAs in various other aspects of management referred to below. We have submitted to the DME two Social and Labor Plans — one for each of our main mining regions — detailing our specific goals in these areas.

 

The Scorecard allows for a portion of ‘offset’ against the HDSAs equity participation requirements insofar as companies have facilitated downstream, value-adding activities in respect of the products they mine. We carry out such downstream activities and believe these will be recognized in terms of a framework currently being devised by the South African government.

 

We have completed a number of asset sales to companies owned by HDSAs in the past (estimated to have been equivalent to 20 percent of our South African production as at August 1, 2005, when our applications for the conversion of our West Wits and Vaal River mineral rights from old order to new order mineral rights were approved). Furthermore, at the end of 2006 we implemented an Employee Share Ownership Plan (“ESOP”) and Black Economic Empowerment transaction, collectively with a value equivalent to approximately 6 percent of our South African assets. This is consistent with our stated strategic intention to develop means of promoting broad based equity participation in the company by HDSAs and with an undertaking made to the DME as a condition for the granting to the company of our new order mining rights. We believe that we have made significant progress towards meeting the requirements of the Charter, the Scorecard and our own undertakings in terms of human resource development, employment equity, mine community and rural development, housing and living conditions, procurement and beneficiation, including the implementation of programs to help achieve the requirement of having 40 percent of management roles being held by HDSAs by 2010. We will incur expenses in giving further effect to the Charter and the Scorecard and the implementation of the ESOP will affect our results of operations. See “Item 5: Operating and financial review and prospects — Establishment of a Black Economic Empowerment (“BEE”) transaction in South Africa” of our Form 20-F for a detailed discussion on the implementation of ESOP.

 

We were informed on August 1, 2005, by the Director General of Minerals and Energy that our applications to convert our old order mining rights to new order mining rights for our West Wits and Vaal River operations, as well as our applications for new mining rights to extend our mining areas at our TauTona and Kopanang mines, had been successful. These applications relate to all of our existing operations in South Africa. The notarial agreements for the converted West Wits mining rights and Block 1C11 new mining rights have been executed and registered as well as the agreements for Jonkerskraal, Weltevreden, Moab Extension Area and the new right for Edom, all of

which form part of the Vaal River operations. Two notarial agreements relating to the Vaal River operations are pending.

 

Even where new order mining rights are obtained under the MPRDA, these rights may not be equivalent to the old order mining rights. Our rights that have been converted and registered do not differ significantly from the relevant old order rights. The duration of the new rights will no longer be perpetual as was the case under old order mining rights but rather will be granted for a maximum period of 30 years, with renewals of up to 30 years each and, in the case of prospecting rights, a maximum period of five years with one renewal of up to three years. Furthermore, the MPRDA provides for a retention period after prospecting of up to three years with one renewal of up to two years, subject to certain conditions, such as non-concentration of resources, fair competition and non-exclusion of others. In addition, the new order rights will only be transferable subject to the approval of the Minister of Minerals and Energy.

 

The new order mining rights can be suspended or cancelled by the Minister of Minerals and Energy if, upon notice of a breach from the Minister, the entity breaching its obligations to comply with the MPRDA or the conditions of the notarial agreement fails to remedy such breach. The MPRDA also imposes additional responsibilities on mining companies relating to environmental management and to environmental damage, degradation or pollution resulting from their prospecting or mining activities. We have a policy of evaluating, minimizing and addressing the environmental consequences of our activities and, consistent with this policy and the MPRDA, conduct an annual review of the environmental costs and liabilities associated with our South African operations in light of the new, as well as existing, environmental requirements.

 

The proposed introduction of South African State royalties where a significant portion of our mineral reserves and operations are located could have an adverse effect on our results of operations and our financial condition.

 

The South African government has announced the details of the proposed new legislation whereby new order rights will be subject to a State royalty. The third draft of the Mineral and Petroleum Resources Royalty Bill was published on December 6, 2007 and provides for the payment of a royalty according to a formula based on earnings before interest, tax and depreciation. It is estimated that the formula could translate to a royalty rate of more than 4 percent of gross sales in terms of current pricing assumptions. The latest proposal would result in a large increase from the 1.5 percent rate proposed in the second draft in 2006, and we are making representations to the government through the South African Chamber of Mines to retain the proposed 1.5 percent rate. The payment of royalties is currently scheduled to begin on May 1, 2009, if the Bill is passed by Parliament in its current form.

 

Certain factors may affect our ability to support the carrying value of our property, plants and equipment, acquired properties, investments and goodwill on our balance sheet.

 

We review and test the carrying value of our assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. We value individual mining assets at the lowest level for which identifiable cash flows are identifiable and independent of cash flows of other mining assets and liabilities.

 

If there are indications that impairment may have occurred, we prepare estimates of expected future cash flows for each group of assets. Expected future cash flows are inherently uncertain, and could materially change over time. They are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditure.

 

If any of these uncertainties occur either alone or in combination, it could require management to recognize an impairment, which could adversely affect our financial condition.

 

Diversity in interpretation and application of accounting literature in the mining industry may impact our reported financial results.

 

The mining industry has limited industry specific accounting literature. As a result, diversity exists in the interpretation and application of accounting literature to mining specific issues. For example, we capitalize the drilling and related costs incurred to define and delineate a residual mineral deposit that has not been classified as proved and probable reserves at a development stage or production stage mine, whereas some companies expense such costs (see “Item 5: Operating and financial review and prospects – critical accounting policies” of our Form 20-F). As and when diversity in interpretation and application is addressed, it may impact our reported results should the adopted interpretation differ from the position followed by us.

 

Our mineral reserves and deposits and mining operations are located in countries that face political, economic and/or security risks.

 

Some of our mineral deposits and mining and exploration operations are located in countries that have experienced political instability and economic uncertainty. In all of the countries where we operate, the formulation or implementation of government policies may be unpredictable on certain issues including regulations which impact on our operations and changes in laws relating to issues such as mineral rights and asset ownership, taxation, royalties, import and export duties, currency transfers, restrictions on foreign currency holdings and repatriation of earnings.

 

In 2007, the government of the Democratic Republic of Congo (“DRC”) announced an industry-wide review of all mining concessions and related agreements. The agreements related to the ownership and operation of our concessions in the DRC are also subject to this review by a commission as appointed by the DRC government. The commission has indicated that it is seeking to increase the DRC government’s stake in our concession and increase land usage charges. The commission’s review process, the timing and the final outcome of which we are unable to predict, could result in an adverse change to us in terms of these agreements which could have an adverse impact upon our current exploration activities and potential future mining activities in the DRC.

 

Any existing and new mining and exploration operations and projects we carry out in these countries are, and will be subject to, various national and local laws, policies and regulations governing the ownership, prospecting, development and mining of mineral reserves, taxation and royalties, exchange controls, import and export duties and restrictions, investment approvals, employee and social/community relations and other matters.

 

If, in one or more of these countries, we were not able to obtain or maintain necessary permits, authorizations or agreements to implement planned projects or continue our operations under conditions or within time frames that make such plans and operations economic, or if legal, ownership, fiscal (including all royalties and duties), exchange control, employment, environmental and social laws and regimes, or the governing political authorities change materially, which could result in changes to such laws and regimes, our results of operations and our financial condition could be adversely affected.

 

In Mali and Tanzania, we are due refunds of input tax which remain outstanding for periods longer than those provided for in the respective statutes. In addition, we have outstanding assessments and unresolved tax disputes in a number of countries. If the outstanding input taxes are not received, the tax disputes are not resolved and assessments are not made in a manner favorable to us, it could have an adverse effect upon our results of operations and our financial condition.

 

In Argentina, the government is looking to apply export taxes of 5 percent to mining companies that were exempt therefrom. We have filed a claim with the courts to prevent payment of an export tax. If the outcome of the tax claim is unfavorable it could have an adverse effect upon our results of operations and our financial condition.

 

Certain of the countries in which we have mineral deposits or mining or exploration operations, including the DRC and Colombia, have in the past experienced and in certain cases continue to experience, a difficult security environment as well as political instability. In particular, various illegal groups active in regions in which we are present may pose a credible threat of terrorism, extortion and kidnapping, which could have an adverse effect on our operations in such regions. In the event that continued operations in these countries compromise our security or business principles, we may withdraw from these countries on a temporary or permanent basis, which in turn, could have an adverse impact on our results of operations and our financial condition.

 

Labor disruptions and/or increased labor costs could have an adverse effect on our operating results and financial condition.

 

As at December 31, 2007, approximately 77 percent (2006: 69 percent) of our workforce excluding contractors or 63 percent of total workforce was located in South Africa. Approximately 98 percent of the workforce on our South African operations is unionized, with the National Union of Mineworkers (“NUM”) representing the majority of unionized workers.

 

Our employees in some South American countries and Ghana are also highly unionized. Trade unions have a significant impact on our labor relations climate, as well as on social and political reforms, most notably in South Africa.

 

It has become established practice to negotiate wages and conditions of employment with the unions every two years through the Chamber of Mines of South Africa. An agreement was signed with the unions in August 2007, following negotiations between NUM, United Associations of South Africa (“UASA”) on behalf of some clerical and junior management staff and Solidarity (on behalf of a small number of miners) and the Chamber of Mines. A two-year deal was reached without resort to any industrial action.

 

Labor costs represent a substantial proportion of our total operating costs and in many operations, including South African operations, is our single largest operating cost category. The two-year wage agreement will be reviewed in June 2009 in negotiation with NUM, UASA, Solidarity and the Chamber of Mines and any increases in labor costs have to be off-set by greater productivity efforts by all operations and employees.

 

There is a risk that strikes or other types of conflict with unions or employees may occur at any one of our operations. It is uncertain whether labor disruptions will be used to advocate labor, political or social goals in the future. Should any labor disruptions occur, if material, they could have an adverse effect on our results of operations and our financial condition.

 

The use of mining contractors at certain of our operations may expose us to delays or suspensions in mining activities and increases in mining costs.

 

Mining contractors are used at certain of our mines, including Sadiola, Morila and Yatela in Mali, Siguiri in Guinea, Iduapriem in Ghana and Sunrise Dam in Australia, to mine and deliver ore to processing plants. Consequently, at these mines, we do not own all of the mining equipment and may face disruption of operations and incur costs and liabilities in the event that any of the mining contractors at these mines has financial difficulties, or should there be a dispute in renegotiating a mining contract, or a delay in replacing an existing contractor. Furthermore, increases in contract mining rates, in the absence of associated productivity increases, will have an adverse impact on our results of operations and financial condition.

 

We compete with mining and other companies for key human resources.

 

We compete with mining and other companies on a global basis to attract and retain key human resources at all levels with appropriate technical skills and operating and managerial experience necessary to continue to operate our business. This is further exacerbated in the current

environment of increased mining activity across the globe combined with the global shortage of key mining industry human resource skills, including geologists, mining engineers, metallurgists and skilled artisans.

 

The retention of staff is particularly challenging in South Africa, where, in addition to the impacts of the global industry wide shortages, we are also required to achieve employment equity targets of participation by HDSAs in management and other positions.

 

We compete with all companies in South Africa to attract and retain a small but growing pool of HDSAs with the necessary skills and experience. For further details see the risk factor “Our new order mineral rights in South Africa could be suspended or cancelled should we breach, and fail to remedy such breach of, our obligations in respect of the acquisition of these rights”.

 

There can be no assurance that we will attract and retain skilled and experienced employees and, should we fail to do so or lose any of our key personnel, our business and growth prospects may be harmed and our results of operations and our financial condition could be adversely affected.

 

We face certain risks in dealing with HIV/AIDS which may adversely affect our results of operations and our financial condition.

 

AIDS remains the major health care challenge faced by our South African operations. The South African workforce prevalence studies indicate that the percentage of our South African workforce infected by HIV may be as high as 30 percent. Accurate prevalence data for AIDS is not available owing to doctor-patient confidentiality. We are continuing to develop and implement various programs aimed at helping those who have been infected with HIV and preventing new infections. Since 2001 we have offered a voluntary counseling and HIV testing program for employees in South Africa. In 2002 we began to offer anti-retroviral therapy (“ART”) to HIV positive employees who met the current medical criteria for the initiation of ART. From April 2003, we have treated all eligible employees desiring it. Currently approximately 4,600 employees are on the wellness program and as at December 2007, approximately 2,100 employees were receiving treatment using anti-retroviral drugs.

 

The cost of providing rigorous outcome-focused disease management of employees with AIDS, including the provision of an anti-retroviral therapy, is on average ZAR1,300 ($185) per employee on treatment per month. It is not yet possible to develop an accurate cost estimate of the program in its entirety, given uncertainties such as drug prices and the ultimate rate of employee participation.

 

We do not expect the cost that we will incur related to the prevention of HIV infection and the treatment of AIDS to materially and adversely affect our results of operations. Nevertheless, it is not possible to determine with certainty the costs that we may incur in the future in addressing this issue, and consequently our results of operations and our financial condition could be adversely affected.

 

We face certain risks in dealing with malaria, particularly at our operations located in Africa, which may have an adverse effect on our results of operations.

 

Malaria is a significant health risk at all of our operations in Central, West and East Africa where the disease assumes epidemic proportions because of ineffective national control programs. The disease is a major cause of death in young children and pregnant women but also gives rise to fatalities and absenteeism in adult men. Consequently, if uncontrolled, the disease could have an adverse effect upon productivity and profitability levels of our operations located in these regions.

 

The treatment of occupational health diseases and the potential liabilities related to occupational health diseases may have an adverse effect upon the results of our operations and our financial condition.

 

The primary areas of focus in respect of occupational health within our operations are noise-induced hearing loss (“NIHL”), occupational lung diseases (“OLD”) and tuberculosis (“TB”). We provide occupational health services to our employees at our occupational health centers and we continue to improve preventative occupational hygiene initiatives. If the costs associated with providing such occupational health services increase, such increase could have an adverse effect on our results of operations and our financial condition.

 

Furthermore, the South African government, by way of a cabinet resolution in 1999, proposed a possible combination and alignment of benefits of the Occupational Diseases in Mines and Works Act (“ODMWA”) that provides for compensation to miners who have OLD, TB and combinations thereof, and the Compensation for Occupational Injuries and Diseases Act (“COIDA”) that provides for compensation to non-miners who have OLD.

 

COIDA provides for compensation payments to workers suffering permanent disabilities from OLD, which are classified as pension liabilities if the permanent disability is above a certain threshold, or a lump sum compensation payment if the permanent disability is below a certain threshold. ODMWA only provides for a lump sum compensation payment to workers suffering from OLD. The capitalized value of a pension liability (in accordance with COIDA) is usually greater than that of a lump sum compensation payment (under ODMWA). In addition, under COIDA compensation becomes payable at a lower threshold of permanent disability than under ODMWA. It is estimated that under COIDA about two to three times more of our employees would be compensated as compared with those eligible for compensation under ODMWA.

 

If the proposed combination of COIDA and ODMWA were to occur, this could further increase the level of compensation claims we could be subject to and consequently could have an adverse effect on our financial condition.

 

Mr. Thembekile Mankayi instituted a legal action against us in October 2006 in the High Court, Witwatersrand Local Division. Mr. Mankayi is claiming approximately ZAR2.6 million for damages allegedly suffered by him as a result of silicosis allegedly contracted while working on mines now owned by us. We have filed an exception against the claim and we were heard in the High Court early February 2008. We filed the exception on the basis that mine employers are insured in terms ODMWA and COIDA against compensable diseases and this prevents any delictual claims by employees against employers. Judgment has been reserved. If we are unsuccessful in defending this suit, we could be subject to numerous similar claims which could have an adverse effect on our financial condition.

 

In response to the effects of silicosis in labor sending communities, a number of mining companies (under the auspices of the Chamber of Mines), together with NUM which is the largest union in the mining sector and the national and regional departments of health have embarked on a project to assist in the delivery of compensation and relief to communities that have been affected.

 

The costs associated with the pumping of water inflows from closed mines adjacent to our operations could have an adverse effect upon our results of operations.

 

Certain of our mining operations are located adjacent to the mining operations of other mining companies. The closure of a mining operation may have an impact upon continued operations at the adjacent mine if appropriate preventative steps are not taken. In particular, this can include the ingress of underground water where pumping operations at the adjacent closed mine are suspended. Such ingress could have an adverse effect upon any one of our mining operations as a result of property damage, disruption to operations and additional pumping costs.

 

We have embarked on legal action in South Africa after the owner of an adjacent mine put the company owning the adjacent mining operation into liquidation, raising questions about its and other companies’ willingness to meet their water pumping obligations.

 

The relevant mining companies have entered into a settlement agreement. As part of the settlement arrangement the mining companies have formed and registered a not-for-profit company, known as the Margaret Water Company, to conduct water pumping activities from the highest lying shaft which is currently owned by Stilfontein Gold Mining Company (in liquidation). The three mining companies will contribute equally to the cost of establishing and initially running the Margaret Water Company.

 

The occurrence of events for which we are not insured or for which our insurance is inadequate may adversely affect our cash flows and overall profitability.

 

We maintain insurance to protect only against catastrophic events which could have a significant adverse effect on our operations and profitability. This insurance is maintained in amounts that are believed to be reasonable depending upon the circumstances surrounding each identified risk.

 

However, our insurance does not cover all potential risks associated with our business. In addition, we may elect not to insure certain risks, due to the high premiums associated with insuring those risks or for various other reasons, including an assessment that the risks are remote. Furthermore, we may not be able to obtain insurance coverage at acceptable premiums. We have a captive insurance company, namely AGRe Insurance Company Limited, which participates at various levels in certain of the insurances which we maintain. The occurrence of events for which we are not insured may adversely affect our cash flows, overall profitability and our financial condition.

 

Risks related to our ordinary shares and ADSs

 

Sales of large quantities of our ordinary shares and ADSs, or the perception that these sales may occur, could adversely affect the prevailing market price of such securities, as could future offerings of our ordinary shares, ADSs or securities exchangeable or exercisable for ordinary shares or ADSs.

 

The market price of our ordinary shares or ADSs could fall if large quantities of ordinary shares or ADSs are sold in the public market, or there is the perception in the marketplace that such sales could occur. Subject to applicable securities laws, holders of our ordinary shares or ADSs may decide to sell them at any time. The market price of our ordinary shares or ADSs could also fall as a result of any future offerings we make of ordinary shares, ADSs, or securities exchangeable or exercisable for our ordinary shares or ADSs, or the perception in the marketplace that these sales might occur. We may make such offerings, including offerings of additional ADS rights, share rights or similar securities, at any time or from time to time in the future.

 

We have entered into a registration rights agreement with the selling security holder that would facilitate U.S. registration of additional offers and sales of our shares that the selling security holder makes in the future, subject to certain conditions. Sales of our ordinary shares or our ADSs if substantial, or the perception that sales may occur and be substantial, could exert downward pressure on the prevailing market prices for our ordinary shares or our ADSs, causing their market prices to decline. In April 2006, the selling security holder sold 19,685,170 of our ordinary shares and, in October 2007, sold an additional 69,100,000 of our ordinary shares. These and other sales, combined with the dilutive effect of our issuance of 9,970,732 ordinary shares in April 2006, reduced the selling security holder shareholding in us from approximately 51 percent of our issued shares as at April 19, 2006 to approximately 16.6 percent as at May 20, 2008. The selling security holder has stated that it intends to reduce and ultimately exit its gold company holdings and that it will continue to explore all available options to exit us in an orderly manner. Sales or distributions of substantial amounts of our

ordinary shares or ADSs, or the perception that such sales or distributions may occur, could adversely affect the market price of our ordinary shares or ADSs.

 

Fluctuations in the exchange rate of different currencies may reduce the market value of our securities, as well as the market value of any dividends or distributions paid by us.

 

We have historically declared all dividends in South African rands. As a result, exchange rate movements may have affected and may continue to affect the Australian dollar, the British pound, the Ghanaian cedi and the U.S. dollar value of these dividends, as well as of any other distributions paid by the relevant depositary to investors that hold our securities. This may reduce the value of these securities to investors. Our Memorandum and Articles of Association allows for dividends and distributions to be declared in any currency at the discretion of our board of directors, or our shareholders at a general meeting. If and to the extent that we opt to declare dividends and distributions in dollars, exchange rate movements will not affect the dollar value of any dividends or distributions, nevertheless, the value of any dividend or distribution in Australian dollars, British pounds, Ghanaian cedis or South African rands will continue to be affected. If and to the extent that dividends and distributions are declared in South African rands, exchange rate movements will continue to affect the Australian dollar, British pound, Ghanaian cedi and U.S. dollar value of these dividends and distributions. Furthermore, the market value of our securities as expressed in Australian dollars, British pounds, Ghanaian cedis, U.S. dollars and South African rands will continue to fluctuate in part as a result of foreign exchange fluctuations.

 

The recently announced proposal by the South African Government to replace the Secondary Tax on Companies with a withholding tax on dividends and other distributions may impact on the amount of dividends or other distributions received by our shareholders.

 

On February 21, 2007, the South African Government announced a proposal to replace Secondary Tax on Companies with a 10 percent withholding tax on dividends and other distributions payable to shareholders. This proposal is expected to be implemented in phases between 2007 and 2009. Although this may reduce the tax payable by our South African operations thereby increasing distributable earnings, the withholding tax will generally reduce the amount of dividends or other distributions received by our shareholders.

 

Risks related to the rights offering

 

The market prices for our ADSs and ordinary shares may fluctuate and may decline below the ADS subscription price and the share subscription price, and we cannot assure you that the listing and admission to trading of the offered shares on the JSE, and thus the offered shares becoming fungible with our existing ordinary shares, as well as the issuance of the offered ADSs, will occur when we expect.

 

We cannot assure you that the public trading market prices of our ADSs and ordinary shares will not decline below the ADS subscription price and the share subscription price. Should that occur after you exercise your rights, you will suffer an immediate unrealized loss as a result. Moreover, we cannot assure you that, following the exercise of rights, you will be able to sell your offered ADSs or offered shares at a price equal to or greater than the ADS subscription price or the share subscription price, as applicable. Until the offered shares are admitted to listing and trading on the JSE, they will not be fungible with our existing ordinary shares currently traded the JSE. Similarly, until the ordinary shares underlying the offered ADSs are admitted to listing and trading on the JSE, you will not be issued any offered ADSs for which you subscribed. We cannot assure you that the listing and trading on the JSE will take place when anticipated. See “The Rights Offering” for further information on the expected dates of these events.

 

Rights that are not exercised prior to the end of the ADS subscription period or the share subscription period, as applicable, will expire valueless without any compensation.

 

The ADS subscription period is expected to begin at 9:00 a.m. (New York City time) on June 4, 2008 and expire at 5:00 p.m. (New York City time) on June 23, 2008. The share subscription period begins at 9:00 a.m. (Johannesburg time) on June 9, 2008 and expires at 12:00 p.m. (Johannesburg time) on July 4, 2008. Any rights unexercised at the end of the applicable subscription period will expire valueless without any compensation.

 

Holders of ADSs are subject to exchange rate risk.

 

In the event that the U.S. dollar weakens against the ZAR, holders of ADSs subscribing for offered ADSs will be required to pay more than the estimated subscription price of $25.28 per offered ADS.

 

The estimated ADS subscription price is $25.28 per offered ADS subscribed. The estimated ADS subscription price is the U.S. dollar equivalent of the share subscription price, using an exchange rate of 7.6735 rands per U.S. dollar (the Federal Reserve Bank of New York’s noon buying rate on May 22, 2008). A subscriber of the offered ADSs must deposit $27.81 per offered ADS subscribed, which represents 110 percent of the estimated ADS subscription price, upon exercise of each ADS right. This is to increase the likelihood that the ADS rights agent will have sufficient funds to pay the final ADS subscription price in light of a possible appreciation of the ZAR against the U.S. dollar between the date hereof and the end of the ADS subscription period and to pay currency conversion fees and the depositary’s issuance fee of $0.03 per new ADS. The ADS rights agent expects to make the conversion from U.S. dollars into ZARs on or about June 27, 2008 in the case of initial subscriptions and on or about July 7, 2008 in the case of excess allocations at a market-based rate to pay the share subscription price for the offered shares underlying the offered ADSs subscribed for. If the actual U.S. dollar price plus the issuance fee is less than the deposit amount, the ADS rights agent will refund such excess U.S. dollar subscription price to the subscribing ADS rights holder without interest. However, if there is a deficiency as a result of such conversion, the ADS rights agent will not issue and deliver the offered ADSs to such subscribing ADS rights holder until it has received payment of the deficiency. The ADS rights agent may sell a portion of your new ADSs to cover the deficiency if not paid by a specified date.

 

Even though the rights offering is being fully underwritten, the underwriting is subject to customary provisions allowing the underwriters to terminate the underwriting in certain limited circumstances.

 

The underwriters in the rights offering have agreed to procure subscribers for, or to subscribe for, any offered shares that are not subscribed for pursuant to the exercise of the rights or allocated pursuant to the excess applications. However, the underwriting agreement grants the underwriters customary rights to terminate the underwriting agreement in certain limited circumstances. If the underwriters are entitled to terminate, and do terminate, the underwriting agreement, the amount of proceeds we raise from the rights offering could be substantially reduced. If we do not raise sufficient funds from the rights offering, we may not be able to both fully implement our planned hedge restructuring while also continuing to fund our principal development projects and growth initiatives without raising additional funds, which we may be unable to do on commercially reasonable terms or in a timely manner. Because the exercise of the rights will be irrevocable upon exercise and may not be cancelled or modified after such time, if you have exercised your rights you will be required to complete your purchase of offered shares or offered ADSs even if the underwriting agreement is terminated.

 

An active trading market may not develop for the ADS rights or the share rights and, if a market does develop, the ADS rights and share rights may be subject to greater price volatility than our ADSs and ordinary shares.

 

A trading period has been set for ADS rights from May 29, 2008 to June 20, 2008 and for the share rights from June 2, 2008 to June 27, 2008. We cannot assure you that an active trading market in the ADS rights on the NYSE or the share rights on the JSE will develop during the respective trading periods or that any over-the-counter trading market in the rights will develop. Even if active markets develop, the trading price of the rights may be volatile.

 

We will not receive any proceeds from the sale of the securities by the selling security holder under this prospectus supplement.

 

The net proceeds received by us from the rights offer, after deduction of underwriting commissions and estimated expenses, are estimated to be approximately ZAR13.1 billion, which was the equivalent of $1.7 billion on May 22, 2008 using an exchange rate of 7.6735 rands per U.S. dollar (the Federal Reserve Bank of New York’s noon buying rate on May 22, 2008).

 

The principal purpose of the rights offer is to provide us with additional financial resources to improve our financial flexibility. In particular, the net proceeds from the rights offer will allow us both to significantly restructure and reduce our existing gold hedging position, which has adversely affected our financial performance in recent years, while also being able to continue to fund our principal development projects and exploration growth initiatives. Pending this use of proceeds, as described in further detail below, the net proceeds of the rights offer may in the interim be used to reduce our short-term borrowings and the borrowings outstanding on our revolving credit facility or retained as cash in accordance with our cash management policies.

 

Reducing our gold hedging position

 

We have traditionally used gold hedging instruments to protect the selling price of some sales against declines in the market price of gold. The use of these instruments has prevented us from fully participating in the significant increase in the market price for gold in recent years. Since 2001, we have been reducing our gold hedge commitments through hedge buy-backs, physical settlement of contracts and other restructurings in order to allow for greater participation in the rising gold price environment. As at December 31, 2007, the total net delta tonnage of our hedge positions was 10.39 million ounces and the total committed hedge position was 11.28 million ounces, an increase of 0.16 million ounces and a reduction of 0.34 million ounces against the December 31, 2006 hedge delta and hedge committed position, respectively. As at December 31, 2007, the marked-to-market value of all hedge transactions making up the hedge positions was negative $4.27 billion.

 

As at March 31, 2008, hedging positions of approximately 3.28 million ounces of hedge delta and 3.66 million ounces of commitments against our gold production will mature in 2008 and 2009. Since the beginning of 2008, prevailing spot gold prices have been significantly higher than those prevailing during 2007. If these high prices continue to prevail, we estimate that, due to our gold hedging arrangements, the prices we will receive for our gold production during 2008 and 2009 will be significantly lower than the prevailing spot prices during those years.

 

We have taken, and continue to take, steps to increase our participation in the higher prevailing spot prices for gold or that will allow us to reduce our hedge position as a percentage of our current or future gold production, including:

 

 

 

 

Given exploration successes at the above greenfields exploration projects to date, we expect that in the foreseeable future these exploration projects are likely to add to our ore reserves and medium to longer term gold production.

 

 

Notwithstanding the steps we have taken to date, our gold hedging position has continued to have a significant adverse affect upon our financial performance. We believe that this has also negatively affected the market price of our ordinary shares, further constraining our financial flexibility. In order to address this issue, the directors have resolved to reduce our gold hedging position significantly. In order to achieve this we intend to procure early settlement of certain contracts otherwise due to mature in 2009 and 2010 during the course of 2008 in addition to settling contracts already due to mature in 2008. Given the low committed prices of these contracts, we expect that if these measures were implemented it would result in a realization of previously recognized losses measured by the difference between the committed price of the contracts and the prevailing gold price at the time that these contracts are settled. If the restructuring is implemented as anticipated the received price for the last nine months of 2008 should be approximately $475 per ounce assuming a gold price of $900 per ounce and gold production for the last nine months of 2008 of 3.8 million ounces. We also continue to give consideration to the early settlement of contracts not currently recorded on our balance sheet (normal purchase normal sale exemption, or NPSE) by means of physical delivery. Such early settlement, if it were to occur, would result in a significant adverse impact on the revenues recorded in our income statement, as sales that would have otherwise been executed at the spot gold price will be replaced with sales based on the contracted prices of such NPSE contracts that are settled, during the year. Furthermore should we conclude that such early physical settlement of NPSE contracts represents a tainting event, we would be required to recognize on balance sheet the fair value of a portion of, or potentially all of, the existing NPSE contracts, which would result in a significant adverse impact on our financial statements. No such conclusion has yet been made by us and we are still considering the potential impact of any such transaction.

 

In addition to the settlement of certain contracts during 2008 we also intend to restructure some of the remainder of our hedge book in order to achieve greater participation in the spot price for gold beyond 2009. The exact nature and extent of the restructuring will depend upon prevailing and

anticipated market conditions at the time of such restructuring, particularly the prevailing gold price and exchange rates and other relevant economic factors.

 

If the restructuring is executed as currently anticipated the overall impact would be to reduce our hedge book to approximately 6.25 million ounces, which would represent 8.6 percent of AngloGold Ashanti’s ore reserves as at December 31, 2007. As a result of this reduction the discount to the spot gold price realized during 2009 is estimated to be approximately 6 percent and at a similar level thereafter assuming a gold price of $900 per ounce.

 

Funding our development projects and exploration initiatives

 

In addition to restructuring and reducing our gold hedge position, a portion of the net proceeds from the rights offering may be applied to the funding of our existing development projects and exploration initiatives consistent with our strategic objective of pursuing growth initiatives to enhance our shareholder value.

 

In 2008, exploration expenditure is budgeted at $220 million, of which $105 million is budgeted to be spent on greenfields exploration and $115 million is budgeted to be spent on brownfields exploration.

 

Current key brownfields development initiatives underway in 2008 include:

 

 

 

We estimate that the total cost to continue to fund our existing development projects, including those projects outlined above, will be approximately $1,262 million in 2008. For more information regarding our brownfields development projects and our greenfields and brownfields exploration initiatives, please see “Prospectus Supplement Summary – Strategy.”

 

Our net tangible book value as of March 31, 2008 was $1.626 million, or $5.77 per ordinary share. Net tangible book value per share represents the amount of our total tangible assets, less total liabilities, divided by the number of ordinary shares outstanding.

 

After giving effect to our sale of 69,470,442 ordinary shares upon exercise of the rights, or pursuant to the underwriters’ commitment, at an offering price of $25.28 per ordinary share, which was the U.S. dollar equivalent of the share subscription price on May 22, 2008 using an exchange rate of 7.6735 rands per U.S. dollar (the Federal Reserve Bank of New York’s noon buying rate on May 22, 2008), and after deducting the underwriting commission and estimated offering expenses payable by us of $51.4 million, our net tangible book value as of March 31, 2008 would have been $3,331 million, or $9.48 per ordinary share. This represents an immediate increase of $3.71 per share to new investors in the rights offering, as illustrated by the following table:

 

 

After giving effect to our sale of 69,470,442 ordinary shares in the rights offering, existing ADS holders or shareholders who do not exercise their ADS rights or share rights, respectively, in the rights offering will be diluted such that a shareholder holding 10 percent of our outstanding ordinary share capital prior to the offering will have its shareholding reduced to approximately 8 percent of our outstanding ordinary share capital following the issuance of 69,470,442 ordinary shares.

 

Total cash costs as calculated and reported by us include costs for all mining, processing, onsite administration costs, royalties and production taxes, as well as contributions from by-products, but exclusive of depreciation, depletion and amortization, rehabilitation costs, employment severance costs, corporate administration costs, capital costs and exploration costs. Total cash costs per ounce are calculated by dividing attributable total cash costs by attributable ounces of gold produced.

 

Total production costs as calculated and reported by us include total cash costs, plus depreciation, depletion and amortization, employee severance costs and rehabilitation and other non-cash costs. Total production costs per ounce are calculated by dividing attributable total production costs by attributable ounces of gold produced.

 

Prior to January 1, 2006 stripping costs incurred in open-pit operations during the production phase to remove additional waste were charged to operating costs on the basis of the average life of mine stripping ratio and the average life of mine costs per ton and resulted in capitalization of such stripping costs (deferred stripping). EITF Issue 04-6 prohibits capitalization of post production stripping costs effective from January 1, 2006. Except for this impact on total cash costs and total production costs, total cash costs and total production costs have been calculated on a consistent basis for all periods presented.

 

Total cash costs and total production costs should not be considered by investors in isolation or as alternatives to production costs, net income/(loss) applicable to ordinary stockholders, income/(loss) before income tax provision, net cash provided by operating activities or any other measure of financial performance presented in accordance with U.S. GAAP or as an indicator of our performance. Furthermore the calculation of total cash costs and total production costs, the calculation of total cash costs, total cash costs per ounce, total production costs and total production costs per ounce may vary significantly among gold mining companies, and by themselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that total cash costs and total production costs in total by mine and per ounce by mine are useful indicators to investors and management as they provide:

 

 

A reconciliation of production costs as included in our audited financial statements to total cash costs and to total production costs for each of the three years in the period ended December 31, 2007 is presented below.

 

AngloGold Ashanti operations – Total
(in $ millions, except as otherwise noted)

 

 

Ordinary Share and ADS Trading

 

The following table sets out, for the periods indicated, the reported intra-day high and low market quotations for our ordinary shares on the JSE and for our sponsored ADSs on the NYSE:

 

 

Annual Dividends

 

The table below sets forth the amounts of interim, final and total dividends paid in respect of the years 2003 through 2008 (through March 31, 2008), in each case in cents per ordinary share.

 

 

 

Future dividends will be dependent on our cash flow, earnings, planned capital expenditures, financial condition and other factors. We do not currently intend to substantially change our practice of paying out dividends from funds available after providing for capital expenditure and long-term growth. Under South African law, we may declare and pay dividends from any capital and reserves included in total shareholders’ equity calculated in accordance with IFRS, subject to our solvency and liquidity. As at December 31, 2007, our total shareholders’ equity on an unconsolidated basis as calculated under IFRS amounted to ZAR18,377 million ($2,699 million). Dividends are payable to shareholders registered at a record date that is after the date of declaration. Given that we are in our highest ever capital expenditure phase, we will continue to manage capital expenditure in line with profitability and cash flow and our approach to the dividend on the basis of prudent financial management.

 

Under the terms of the Company’s Articles of Association adopted on December 5, 2002, dividends may be declared in any currency at the discretion of our board of directors or our shareholders at a general meeting. Currently, dividends are declared in South African rands and paid in Australian dollars, South African rands, British pounds and Ghanaian cedis. Dividends paid to registered holders of our ADSs are paid in U.S. dollars converted from South African rands by The Bank of New York, as depositary, in accordance with the deposit agreement.

 

Exchange Rate Information

 

The following table sets forth for the periods and dates indicated certain information concerning the noon buying rate in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York expressed in rands per $1.00. On May 22, 2008, the noon buying rate between rands and U.S. dollars was R7.6735 = $1.00.

 

 

 

 

The following table sets forth our consolidated capitalization at March 31, 2008 on an actual basis and as adjusted to give effect to the issuance of the offered shares. This table does not reflect the application of the net proceeds of the rights offering for the purposes described under “Purpose of the Rights Offering,” including their application to temporarily reduce borrowings pending their use for those purposes.

 

You should read this table together with our U.S. GAAP financial statements and related discussion and analysis included in our Form 20-F.

 

 

 

The selling security holder is Anglo South Africa Capital (Proprietary) Limited, a corporation incorporated under the laws of the Republic of South Africa, with its principal executive offices at 44 Main Street, Johannesburg, 2001, South Africa. As at December 31, 2007, December 31, 2006 and December 31, 2005, the selling security holder was our largest shareholder with an equity interest and voting rights of 16.6 percent, 42.0 percent and 50.9 percent, respectively.

 

As of May 29, 2008, the selling security holder owned 46,002,929 of our ordinary shares, representing 16.6 percent of our total ordinary share capital. The selling security holder was originally issued share rights to subscribe for an additional 11,335,259 of our ordinary shares in terms of the rights offering. Pursuant to the terms of the rights offering, the selling security holder may exchange all or a portion of its share rights for a corresponding number of ADS rights. If the selling security holder exercises all of its rights, it will receive 11,335,259 additional ordinary shares (including in the form of ADSs if ADS rights are exercised), which, together with its existing 46,002,929 ordinary shares, would represent 16.6 percent of our total ordinary share capital as of May 29, 2008, after giving effect to the exercise of all outstanding share rights and ADS rights by other holders of such rights.

 

This prospectus supplement covers the sale by the selling security holder of up to all of the share rights and ADS rights that it receives in exchange for letters of allocation in terms of the rights offering, and up to all 11,335,259 additional ordinary shares (including in the form of ADSs if ADS rights are exercised) that it may receive upon exercise of the rights. Based on information provided to us by the selling security holder, if the selling security holder sells all of the securities that it owns that are covered by this prospectus supplement, it will not own any rights and will own 46,002,929 of our ordinary shares, representing 16.6 percent of our total ordinary share capital as of May 29, 2008, and 13.3 percent of our total ordinary share capital as of May 29, 2008, after giving effect to the exercise of all outstanding share rights and ADS rights by holders of such rights.

 

The selling security holder is wholly owned indirectly by AA plc. Therefore, AA plc is a beneficial owner of the securities being offered by the selling security holder pursuant to this prospectus supplement.

 

AA plc is one of the world’s largest mining and natural resource groups. AA plc’s address is 20 Carlton House Terrace, London SW1Y 5AN, England. With its subsidiaries, joint ventures and associates, it is a global leader in platinum group metals and diamonds, with significant interests in coal, base and ferrous metals, as well as an industrial minerals business. The group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia.

 

Prior to October 9, 2007, our Board of Directors included representatives of AA plc. Prior to April 20, 2006, AA plc controlled a majority of our voting shares.

 

We have no service agreements with AA plc or any of its subsidiaries or other contracts in terms of which any revenue or profit-related fees are payable to AA plc or its affiliates. For a further description of our relationship with AA plc and a description of our related party transactions see “Item 7: Major shareholders and related party transactions” in our Form 20-F.

 

The selling security holder does not have voting rights that differ from the voting rights of other shareholders.

 

General Information

 

We have offered our shareholders, recorded in the register at the share record date, the right to subscribe for offered shares in the form of ordinary shares pursuant to and in transferable, renounceable (nil paid) share rights as set forth in letters of allocation granted to them under South African law. We have also arranged with The Bank of New York, the depositary for our ADSs, and accordingly the holder of record of the ordinary shares underlying the ADSs, to make available to holders of our ADSs at the ADS record date transferable ADS rights granted to them under contractual agreement.

 

Holders of our ordinary shares will receive 24.6403 share rights for every 100 ordinary shares that they own on the share record date, as set forth in a letter of allocation issued in electronic form. Each share right entitles the holder thereof to subscribe for one offered share at the share subscription price. Fractions of share rights or ADS rights will not be issued. All offered shares not taken up will be available for allocation to holders of rights who wish to apply for a greater number of offered shares or offered ADSs, as the case may be, than those initially offered to them under the rights offering, subject to certain limitations as described below.

 

The electronic record for holders of certificated ordinary shares is being maintained by Computershare Investor Services (Proprietary) Limited, or Computershare, which has made it possible for holders of certificated shares to enjoy the same rights and opportunities as holders of dematerialized shares in respect of share rights. Each eligible dematerialized holder of ordinary shares will have its account at its Central Securities Depositary Participant, or CSDP, or broker credited with its share rights. Each eligible certificated holder of ordinary shares will have its share rights credited to an account in electronic form with the South African transfer secretaries (which will be administrated by the South African transfer secretaries on their behalf) and will be sent a form of instruction regarding acceptance and payment.

 

Each eligible registered holder of ADSs will be sent an ADS rights certificate evidencing ADS rights, instructions relating to the exercise of these ADS rights and a prospectus supplement relating to the rights offering. Each eligible beneficial owner of ADSs will receive a book-entry credit of ADS rights in its DTC participant account, instructions relating to the exercise of the ADS rights and a prospectus supplement relating to the rights offering.

 

We will issue 69,470,442 new ordinary shares, including ordinary shares represented by ADSs, in the rights offering. We expect to have 347,352,867 ordinary shares outstanding after the rights offering, not including shares which may be issued in connection with the pending acquisition of Golden Cycle Corporation or upon the exercise of outstanding options or convertible bonds.

 

Further information about the rights, the procedures for exercising the rights and the transfer of the rights is summarized below.

 

Restrictions on Participation in the Rights Offering by certain ADS Holders and Shareholders

 

The rights offering is only addressed to persons to whom it may lawfully be made. The distribution of this prospectus supplement, and the exercise of any of the rights, may be restricted by law. Persons into whose possession this prospectus supplement comes or who wish to exercise any of the rights must inform themselves about and observe any such restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction. Due to the restrictions under the securities laws of certain countries, shareholders resident in such countries, may not exercise rights. In particular, the rights offering is not made to any shareholder resident in Japan or resident in the EEA who is not an EU Qualifying Shareholder, or to any shareholder in the UK who is not a Relevant Person (together “EU Prohibited Shareholders”) and no EU Prohibited Shareholder shall be able to exercise rights.

 

Subscription by Holders of ADS Rights

 

Timetable

 

The timetable below lists certain important dates relating to the rights offering, some of which are subject to change. All time references are to New York City time.