20092010Figures in million20102009
SA Rands US Dollars
   

34 Contractual commitments and contingencies

    Operating leases    
    At 31 December 2010, the group was committed to making the following payments in respect of operating leases for amongst others, the hire of plant and equipment and land and buildings. Certain contracts contain renewal options and escalation clauses for various periods of time.    
    Expiry:    
70 116 – within one year 18 9
13 48 – between one and two years 7 2
28 12 – between two and five years 2 4
1 3 – after five years
112 179   27 15
    Finance leases    
    The group has finance leases for plant and equipment, buildings and motor vehicles. The leases for plant and equipment and buildings have terms of renewal but no purchase options. The motor vehicle leases have no purchase options. Renewals are at the option of the specific entity that holds the lease. Future minimum lease payments under finance lease contracts together with the present value of the net minimum lease payments are as follows:    
Present
value of
payments
Minimum
payments
Figures in millionMinimum
payments
Present
value of
payments
2010 2010
SA Rands US Dollars
3768Within one year106
118222After one year but not more than five years3417
228314More than five years4835
383604Total minimum lease payments9258
(221)Amounts representing finance charges(34)
383383Present value of minimum lease payments5858
     
2009 2009
4073Within one year105
149262After one year but not more than five years3520
241350More than five years4834
430685Total minimum lease payments9359
(255)Amounts representing finance charges(34)
430430Present value of minimum lease payments5959
     
20092010Figures in million20102009
SA Rands US Dollars
  Capital commitments  
  Acquisition of tangible assets  
9761,156Contracted for176131
12,5156,494Not contracted for9881,683
13,4917,650Authorised by the directors1,1641,814
  Allocated to:  
  Project capital  
1,9652,841– within one year433264
4,419702– thereafter107594
6,3843,543 540858
  Stay-in-business capital  
5,2442,664– within one year404705
1,8631,443– thereafter220251
7,1074,107 624956
4281Share of underlying capital commitments of joint ventures126
         
  Purchase obligations  
  Contracted for  
2,5732,614– within one year398346
713922– thereafter14096
3,2863,536 538442

Purchase obligations represent contractual obligations for the purchase of mining contract services, power, supplies, consumables, inventories, explosives and activated carbon.

To service these capital commitments, purchase obligations and other operational requirements, the group is dependent on existing cash resources, cash generated from operations and borrowing facilities.

Cash generated from operations is subject to operational, market and other risks. Distributions from operations may be subject to foreign investment, exchange control laws and regulations, and the quantity of foreign exchange available in offshore countries. In addition, distributions from joint ventures are subject to the relevant board approval.

The credit facilities and other finance arrangements contain financial covenants and other similar undertakings. To the extent that external borrowings are required, the group’s covenant performance indicates that existing financing facilities will be available to meet the commitments detailed above. To the extent that any of the financing facilities mature in the near future, the group believes that sufficient measures are in place to ensure that these facilities can be refinanced.

Summary of contracted uranium sales as at 31 December 2010

The group had the following forward pricing uranium commitments:

Year000lbs (1) Average
contracted
price
($/lbs) (2)
201149433.97
201249434.35
201349434.74

Great Noligwa, Kopanang and Moab Khotsong produced 1.46m pounds of uranium oxide in 2010 (2009: 1.44m pounds).

(1)Certain contracts allow the buyer to adjust the purchase quantity within a specified range.
(2)Certain contracts are subject to price adjustment mechanisms. In these cases the price disclosed indicates the previous periodic price reset.

In addition, the group had gold sale commitments as disclosed in note 35.

Liabilities
included
in the
statement
of financial
position
Guaran-
tees
and
contin-
gencies
Liabilities
included
in the
statement
of financial
position
Guaran-
tees
and
contin-
gencies
Figures in million Guaran-
tees
and
contin-
gencies
Liabilities
included
in the
statement
of financial
position
Guaran-
tees
and
contin-
gencies
Liabilities
included
in the
statement
of financial
position
2009 2010   2010 2009
SA Rands  US Dollars
        Contingent liabilities        
Groundwater pollution (1)
Deep groundwater pollution – South Africa (2)
560 587 Sales tax on gold deliveries – Brazil (3) 89 76
191 219Other tax disputes – Brazil (4) 34 25
67 70Indirect taxes – Ghana (5) 11 9
ODMWA litigation (6)
        Contingent assets        
Royalty – Boddington Gold Mine (7)
Royalty – Tau Lekoa Gold Mine (8)
        Guarantees        
        Financial guarantees        
100 100Oro Group (Pty) Limited (9) 15 13
3,2933,293Hedging guarantees Ashanti Treasury Services (10) (13) 443 443
3,2133,213 Geita Management Company (11) (13) 443 443
1,0711,071 AngloGold South America (12) (13) 144 144
1,6791,679 AngloGold USA Trading Company (12) (13) 226 226
Cerro Vanguardia S.A. (12) (13)
9,25610,174 976  149 1,368 1,245
Contingent liabilities
(1)AngloGold Ashanti has identified groundwater contamination plumes at certain of its operations, which have occurred primarily as a result of seepage from mine residue stockpiles. Numerous scientific, technical and legal studies have been undertaken to assist in determining the magnitude of the contamination and to find sustainable remediation solutions. The group has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural Attenuation (MNA) by the existing environment will contribute to improvement in some instances. Furthermore, literature reviews, field trials and base line modelling techniques suggest, but are not yet proven, that the use of phyto-technologies can address the soil and groundwater contamination. Subject to the completion of trials and the technology being a proven remediation technique, no reliable estimate can be made for the obligation.
(2)The company has identified a flooding and future pollution risk posed by deep groundwater in the Klerksdorp and Far West Rand gold fields. Various studies have been undertaken by AngloGold Ashanti Limited since 1999. Due to the interconnected nature of mining operations, any proposed solution needs to be a combined one supported by all the mines located in these gold fields. As a result, the Department of Mineral Resources and affected mining companies are involved in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made for the obligation.
(3) Mineração Serra Grande S.A. (MSG), received two tax assessments from the State of Goiás related to payments of sales taxes on gold deliveries for export. AngloGold Ashanti Córrego do Sitío Mineração S.A. manages the operation and its attributable share of the first assessment is approximately $55m, R363m (2009: $47m, R347m). In November 2006, the administrative council’s second chamber ruled in favour of MSG and fully cancelled the tax liability related to the first period.
 The State of Goiás has appealed to the full board of the State of Goiás tax administrative council. The second assessment was issued by the State of Goiás in October 2006 on the same grounds as the first assessment, and the company’s attributable share of the assessment is approximately $34m, R224m (2009: $29m, R213m). The company believes both assessments are in violation of federal legislation on sales taxes.
(4)MSG received a tax assessment in October 2003 from the State of Minas Gerais related to sales taxes on gold. The tax administrators rejected the company’s appeal against the assessment. The company is now appealing the dismissal of the case. The company’s attributable share of the assessment is approximately $10m, R64m (2009: $8m, R66m). AngloGold Ashanti Limited subsidiaries in Brazil are involved in various disputes with tax authorities. These disputes involve federal tax assessments including income tax, royalties, social contributions and annual property tax. The amount involved is approximately $24m, R155m (2009: $17m, R125m).
(5)AngloGold Ashanti (Ghana) Limited received a tax assessment for $11m, R70m (2009: $9m, R67m) during September 2009 in respect of the 2006, 2007 and 2008 tax years, following an audit by the tax authorities related to indirect taxes on various items. Management is of the opinion that the indirect taxes are not payable and the company has lodged an objection.
(6)The case of Mr Thembekile Mankayi was heard in the High Court of South Africa in June 2008, and an appeal heard in the Supreme Court of Appeals in 2010. In both instances judgement was awarded in favour of AngloGold Ashanti Limited. A further appeal that was lodged by Mr Mankayi was heard in the Constitutional Court in 2010. Judgement in the Constitutional Court was handed down on 3 March 2011.
 Following the judgement, Mr Mankayi’s executor may proceed with his case in the High Court. This will comprise, amongst others, providing evidence showing that Mr Mankayi contracted silicosis as a result of negligent conduct on the part of AngloGold Ashanti.
 The company is still studying the details of the Constitutional Court judgement and will defend the case and any subsequent claims on their merits. Should other individuals or groups lodge similar claims, these too would be defended by the company and adjudicated by the Courts on their merits. In view of the limitation of current information for the accurate estimation of a possible liability, no reliable estimate can be made for this possible obligation.
Contingent assets
(7)As a result of the sale of the interest in the Boddington Gold Mine joint venture during 2009, the group is entitled to receive a royalty on any gold recovered or produced by the Boddington Gold Mine, where the gold price is in excess of Boddington Gold Mine’s cash cost plus $600/oz. The royalty commenced on 1 July 2010 and is capped at a total amount of $100m, R657m. Royalties of $4m, R30m were received during the year.
(8)As a result of the sale of the interest in the Tau Lekoa Gold Mine during 2010, the group is entitled to receive a royalty on the production of a total of 1.5Moz by the Tau Lekoa Gold Mine and in the event that the average monthly rand price of gold exceeds R180,000/kg (subject to inflation adjustment). Where the average monthly rand price of gold does not exceed R180,000/kg (subject to inflation adjustment), the ounces produced in that quarter do not count towards the total 1.5Moz upon which the royalty is payable. The royalty will be determined at 3% of the net revenue (being gross revenue less state royalties) generated by the Tau Lekoa assets. Royalties of $3m, R21m were received during the year.
Guarantees
(9)The company has provided sureties in favour of a lender on a gold loan facility with its affiliate Oro Group (Pty) Limited and one of its subsidiaries to a maximum value of $15m, R100m (2009: $13m, R100m). The suretyship agreements have a termination notice period of 90 days.
(10)The group, together with its wholly owned subsidiary, AngloGold Ashanti Holdings plc, has provided guarantees to several counterparty banks for the hedging commitments of its wholly owned subsidiary Ashanti Treasury Services Limited (ATS).
(11)The group and its wholly owned subsidiary, AngloGold Ashanti Holdings plc, have issued hedging guarantees to several counterparty banks in which they have guaranteed the due performance by the Geita Management Company Limited (GMC) of its obligations under or pursuant to the hedging agreements entered into by GMC, and to the payment of all money owing or incurred by GMC as and when due.
(12)The group has issued gold delivery guarantees to several counterparty banks in which it guarantees the due performance of its subsidiaries AngloGold USA Trading Company, AngloGold South America Limited and Cerro Vanguardia S.A. under their respective gold hedging agreements.
(13)At 31 December 2010, the group had no open gold hedge contracts.