Maintain financial flexibility

AngloGold Ashanti is committed to maximising long-term shareholder value and returns and so must ensure that our balance sheet remains able to meet our core funding needs. We achieve this by applying a clear Capital Allocation Framework.

The framework prioritises investment in our asset base, to support the health and sustainability of the business. The sustaining free cash flow that comes as a result is earmarked to:

Return cash to shareholders through our defined dividend payout ratio focused on dividend returns based on free cash flow before growth capital expenditure
Self-fund growth capital expenditure, with a disciplined focus on risk-adjusted returns
Maintain a solid balance sheet, giving us strategic flexibility through the cycle

We ensure sufficient flexibility at all times to reinvest continuously in our asset base and so supporting the long-term sustainability of our business. Maintaining a strong balance sheet remains important in the current operating environment in which global economic volatility, rising interest rates and high inflation present added complexity and risk to the mining industry in general, and more so, for a single commodity producer such as AngloGold Ashanti, for which no true pricing power exists.

While our ability to generate free cash flow improves markedly as the gold price increases, we nonetheless maintain our focus on ensuring a strong balance sheet through all stages of the commodity cycle.

Disciplined, shareholder-focused capital allocation

Transparent allocation hierarchy to maximise long-term shareholder value and returns

Reinvesting in our asset base to support the long-term sustainability of our business
Commitment to cash returns to shareholders
Solid balance sheet underpins flexibility and optionality through the cycle
Growth focused on risk-adjusted returns
Allocation of cash tested against shareholder returns

One measure of the success of our capital allocation strategy is our ability to generate sustainable free cash flow through the cycle, as well as total shareholder returns. Other metrics monitored include: adjusted net debt to adjusted EBITDA ratio (as defined in the Revolving Credit Agreements); and cash and cash equivalents.

Key metrics and related targets 2022

Metrics	Aims, targets	Performance
Relative total shareholder return (TSR)	Improve shareholder returns relative to comparator group	13% shareholder return, not meeting threshold measure in 2022
Absolute TSR	Improve absolute shareholder returns with reference to the US cost of equity	13% shareholder return, exceeding the stretch measure
Normalised cash return on equity (nCROE)	Improve free cash flow generation relative to shareholders’ equity and the US cost of equity, on a three-year trailing basis	24.4% nCROE, exceeding stretch measure

Progress still to be made

Achieved

Related risk:

Risk 1 — Adverse regulatory changes to mining rights and fiscal requirements

Risk 2 — Failure to successfully deliver and ramp up growth projects

Risk 3 — Adverse future implications of event risks

Risk 4 — Inability to convert Mineral Resource and Mineral Reserve

Risk 6 — Failure to move down the industry cost curve – all-in sustaining cost competitiveness

Risk 7 — Loss of or threats to the social licence to operate

Risk 8 — Adverse gold and commodity prices, and currency movements

Risk 9 — Inability to meet investor expectations on responsible mining

Performance outcomes

The relative and absolute TSRs are based on a three-year trailing average using the average share price achieved in 2019 as the base and comparing it to the average share price achieved in 2022. The average share price in 2019 ($16.74/ share) grew by 13% over this period, inclusive of dividends paid ($1.09/share) from January 2020 through to the end of December 2022
Absolute TSR growth exceeded the stretch target set, while the Relative TSR performance is compared to a comparator peer group. The median TSR of the comparator peer group was 49.05% at 31 December 2022
A three-year trailing average nCROE of 24.4% was achieved on the back of strong free cash flow generation over the same period, notwithstanding an annualised increase in shareholders’ equity of 3%
Improved balance sheet flexibility was achieved with the new five-year multi-currency revolving credit facility maturing in June 2027, with two one-year extensions on application, with a syndicate of 13 banks
Liquidity remains strong, providing good financial flexibility with $1.1bn of cash and cash equivalents and overall Group liquidity at approximately $2.5bn as at 31 December 2022
A total dividend for the year of ~47 US cents was declared, based on the dividend pay-out ratio under the policy of 20% of free cash flow before growth capital expenditure
Credit ratings remained unchanged at investment grade from Moody’s (Baa3, stable outlook) and Fitch (BBB-, stable outlook changing to negative outlook). The Standard & Poor’s rating remained one notch below investment grade (BB+, stable outlook).

For further detail on our performance in relation to this strategic pillar, see the CFO’s report and outlook and the <AFS>.