Mining terms

BIF: B anded Ironstone Form ation. A chem ically form ed iron-rich

sedim entary rock.
By-products: Any products that em anate from the core process of
producing gold, including silver, uranium and sulphuric acid.
Calc-silicate rock: A m etam orphic rock consisting m ainly of
calcium -bearing silicates such as diopside and w ollastonite, and
form ed by m etam orphism of im pure lim estone or dolom ite.
Carbon-in-leach (CIL): G old is leached from a slurry of gold ore
w ith cyanide in agitated tanks and adsorbed on to carbon granules
in the sam e circuit. The carbon granules are separated from the
slurry and treated in an elution circuit to rem ove the gold.
Carbon-in-pulp (CIP): G old is leached conventionally from a
slurry of gold ore w ith cyanide in agitated tanks. The leached slurry
then passes into the C IP circuit w here carbon granules are m ixed
w ith the slurry and gold is adsorbed on to the carbon. The
granules are separated from the slurry and treated in an elution
circuit to rem ove the gold.
Comminution: C om m inution is the crushing and grinding of ore to
m ake gold available for treatm ent. (See also M illing).
Contained gold: The total gold content (tons m ultiplied by grade) of
the m aterial being described.
Cut-off Grade (Surface Mines): The m inim um grade at w hich a
unit of ore w ill be m ined to achieve the desired econom ic outcom e.
Depletion: The decrease in quantity of ore in a deposit or property
resulting from extraction or production.
Development: The process of accessing an orebody through shafts
and/or tunnelling in underground m ining operations.
Diorite: An igneous rock form ed by the solidification of m olten
m aterial (m agm a).
Electro-winning: A process of recovering gold from solution by
m eans of electrolytic chem ical reaction into a form that can be
sm elted easily into gold bars.
Elution: R ecovery of the gold from the activated carbon into solution
before zinc precipitation or electro-w inning.
Grade: The quantity of gold contained w ithin a unit w eight of gold-
bearing m aterial generally expressed in ounces per short ton of ore
(oz/t), or gram s per m etric tonne (g/t).
Greenschist: A schistose m etam orphic rock w hose green colour is
due to the presence of chlorite, epidote or actinolite.
Indicated Mineral Resource: An Indicated M ineral R esourceis
that part of a M ineral R esource for w hich tonnage, densities, shape,
physical characteristics, grade and m ineral content can be estim ated
w ith a reasonable level of confidence. It is based on exploration,
sam pling and testing inform ation gathered through appropriate
techniques from locations such as outcrops, trenches, pits, w orkings
and drill holes. The locations are too w idely or inappropriately spaced
to confirm geological and/or grade continuity but are spaced closely
enough for continuity to be assum ed.
Inferred Mineral Resource: An Inferred M ineral R esourceis that
part of a M ineral R esource for w hich tonnage, grade and m ineral
content can be estim ated w ith a low level of confidence. It is inferred
from geological evidence and assum ed but not verified geological
Glossary of terms
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AngloG old Ashanti_Annual Financial Statements 2006_Page 319
and/or grade continuity. It is based on inform ation gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, w orkings and drill holes w hich m ay be lim ited or of uncertain
quality and reliability.
Leaching: D issolution of gold from crushed or m illed m aterial,
including reclaim ed slim e, prior to adsorption on to activated carbon.
Life of mine (LOM): N um ber of years that the operation is planning
to m ine and treat ore, and is taken from the current m ine plan.
Measured Mineral Resource: A M easured M ineral R esourceis
that part of a M ineral R esource for w hich tonnage, densities,
shape, physical characteristics, grade and m ineral content can be
estim ated w ith a high level of confidence. It is based on detailed
and reliable exploration, sam pling and testing, inform ation
gathered through appropriate techniques from locations such as
outcrops, trenches, pits, w orkings and drill holes. The locations
are spaced closely enough to confirm geological and grade
continuity.
Metallurgical plant: A processing plant erected to treat ore and
extract gold.
Milling: A process of reducing broken ore to a size at w hich
concentrating can be undertaken. (See also C om m inution).
Mine call factor: The ratio, expressed as a percentage, of the
total quantity of recovered and unrecovered m ineral product after
processing w ith the am ount estim ated in the ore based on
sam pling. The ratio of contained gold delivered to the m etallurgical
plant divided by the estim ated contained gold of ore m ined based
on sam pling.
Mineral deposit: A m ineral deposit is a concentration (or
occurrence) of m aterial of possible econom ic interest in or on the
Earths crust.
Mineral Resource: A M ineral R esourceis a concentration or
occurrence of m aterial of intrinsic econom ic interest (in or on the
Earths crust) in such form , quality and quantity that there are
reasonable prospects for eventual econom ic extraction. The
location, quantity, grade, geological characteristics and continuity of
a M ineral R esource are know n, estim ated or interpreted from specific
geological evidence and know ledge. M ineral R esources are sub-
divided, in order of increasing geological confidence, into Inferred,
Indicated and M easured categories.
Ore Reserve: An O re R eserveis the econom ically m ineable part of
a M easured and/or Indicated M ineral R esource. It includes diluting
m aterials and allow ances for losses, w hich m ay occur w hen the
m aterial is m ined. Appropriate assessm ents and studies have been
carried out, and include consideration of and m odification by
realistically assum ed m ining, m etallurgical, econom ic, m arketing,
legal, environm ental, social and governm ental factors. These
assessm ents dem onstrate that at the tim e of reporting, extraction
could reasonably be justified. O re R eserves are sub-divided in order
of increasing confidence into Probable O re R eserves and Proved O re
R eserves.
Ounce (oz) (troy): U sed in im perial statistics. A kilogram is equal to
32.1507 ounces. A troy ounce is equal to 31.1035 gram s.
Pay limit: The grade of a unit of ore at w hich the revenue from the
recovered m ineral content of the ore is equal to the total cash cost
including O re R eserve D evelopm ent and stay-in-business capital.
This grade is expressed as an in-situ value in gram s per tonne or
ounces per short ton (before dilution and m ineral losses).
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Glossary of terms Mining cont.
Precipitate: The solid product of chem ical reaction by fluids such as
the zinc precipitation referred to below .
Probable Reserve: A Probable O re R eserveis the econom ically
m ineable part of an Indicated, M easured M ineral R esource. It
includes diluting m aterials and allow ances for losses w hich m ay
occur w hen the m aterial is m ined. Appropriate assessm ents and
studies have been carried out, and include consideration of and
m odification by realistically assum ed m ining, m etallurgical,
econom ic, m arketing, legal, environm ental, social and governm ental
factors. These assessm ents dem onstrate at the tim e of reporting
that extraction could reasonably be justified.
Productivity: An expression of labour productivity based either on
the ratio of gram s of gold produced per m onth to the total num ber
of em ployees or area m ined (in square m etres) per m onth to the total
num ber of em ployees in underground m ining operations.
Proved Reserve: A Proved O re R eserveis the econom ically
m ineable part of a M easured M ineral R esource. It includes diluting
m aterials and allow ances for losses w hich m ay occur w hen the
m aterial is m ined. Appropriate assessm ents and studies have been
carried out, and include consideration of and m odification by
realistically assum ed m ining, m etallurgical, econom ic, m arketing,
legal, environm ental, social and governm ental factors. These
assessm ents dem onstrate at the tim e of reporting that extraction
could reasonably be justified.
Project capital: C apital expenditure to either bring a new operation
into production; to m aterially increase production capacity; or to
m aterially extend the productive life of an asset.
Reclamation: In the South African context, reclam ation describes
the process of reclaim ing slim es (tailings) dum ps using high-pressure
w ater cannons to form a slurry w hich is pum ped back to the
m etallurgical plants for processing.
Recovered grade: The recovered m ineral content per unit of ore
treated.
Reef: A gold-bearing sedim entary horizon, norm ally a conglom erate
band that m ay contain econom ic levels of gold.
Refining: The final purification process of a m etal or m ineral.
Rehabilitation: The process of reclaim ing land disturbed by m ining
to allow an appropriate post-m ining use. R ehabilitation standards are
defined by country-specific law s including, but not lim ited to the
South African D epartm ent of M inerals and Energy, the U S B ureau of
Land M anagem ent, the U S Forest Service, and the relevant
Australian m ining authorities, and address am ong other issues,
ground and surface w ater, topsoil, final slope gradient, w aste
handling and re-vegetation issues.
Seismic event: A sudden inelastic deform ation w ithin a given
volum e of rock that radiates detectable seism ic w aves energy.
Shaft: A vertical or subvertical excavation used for accessing an
underground m ine; for transporting personnel, equipm ent and
supplies; for hoisting ore and w aste; for ventilation and utilities;
and/or as an auxiliary exit.
Skarn: A rock of com plex m ineralogical com position, form ed by
contact m etam orphism and m etasom atism of carbonate rocks.
Smelting: A pyro-m etallurgical operation in w hich gold is further
separated from im purities.
AngloG old Ashanti_Annual Financial Statements 2006_Page 321
Stay-in-business capital: C apital expenditure to m aintain existing
production assets. This includes replacem ent of vehicles, plant and
m achinery, ore reserve developm ent and capital expenditure related
to safety, health and the environm ent.
Stope: U nderground excavation w here the orebody is extracted.
Stoping: The process of excavating ore underground.
Stripping ratio: The ratio of w aste tonnes to ore tonnes m ined
calculated as total tonnes m ined less ore tonnes m ined divided by
ore tonnes m ined.
Syngenetic: Form ed contem poraneously w ith the deposition of the
sedim ent.
Tailings: Finely ground rock of low residual value from w hich
valuable m inerals have been extracted.
Tailings dam (slimes dam): D am facilities designed to store
discarded tailings.
Tonne: U sed in m etric statistics. Equal to 1,000 kilogram s.
Ton: U sed in im perial statistics. Equal to 2,000 pounds. R eferred to
as a short ton.
Tonnage: Q uantity of m aterial m easured in tonnes or tons.
Waste: M aterial that contains insufficient m ineralisation for
consideration for future treatm ent and, as such, is discarded.
Yield: The am ount of valuable m ineral or m etal recovered from each
unit m ass of ore expressed as ounces per short ton or gram s per
m etric tonne.
Zinc precipitation: Zinc precipitation is the chem ical reaction using
zinc dust that converts gold in solution to a solid form for sm elting
into unrefined gold bars.
Financial terms
Adjusted gross margin: Adjusted gross profit (loss) divided by gold
sales including realised non-hedge derivatives.
Adjusted gross profit (loss): G ross profit (loss) excluding
unrealised non-hedge derivatives and other com m odity contracts.
Adjusted headline earnings: H eadline earnings excluding unrealised
non-hedge derivatives, fair value adjustm ents on the option com ponent
of the convertible bond, fair value gain (loss) on interest rate sw ap,
adjustm ents to other com m odity contracts and deferred tax thereon.
Average number of employees: The m onthly average num ber of
production and non-production em ployees and contractors
em ployed during the year, w here contractors are defined as
individuals w ho have entered into a fixed-term contract of
em ploym ent w ith a group com pany or subsidiary. Em ployee
num bers of joint ventures represents the groups attributable share.
Capital expenditure: Total capital expenditure on tangible assets
w hich includes stay-in-business and project capital.
Cash gross margin: C ash gross profit (loss) divided by gold sales
including realised non-hedge derivatives.
Cash gross profit (loss): Adjusted gross profit (loss) plus
am ortisation of tangible and intangible assets less non-cash
revenues.
Glossary of terms Financial
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Discontinued operation: A com ponent of an entity that, pursuant to
a single plan, has been disposed of or abandoned or is classified as
held-for-sale until conditions precedent to the sale have been fulfilled.
EBITDA: O perating profit (loss) before am ortisation of tangible and
intangible assets, im pairm ent of tangible and intangible assets, profit
(loss) on disposal of assets and investm ents and unrealised non-
hedge derivatives, plus the share of associatesEB ITD A.
Effective tax rate: C urrent and deferred taxation as a percentage
ofprofit before taxation.
Equity: Shareholders' equity adjusted for other com prehensive
incom e, actuarial gain (loss) and deferred taxation. W here average
equity is referred to, this is calculated by averaging the figures at the
beginning and the end of the financial year.
Free cash flow: N et cash inflow from operating activities less stay-
in-business capital expenditure.
Gross margin %: Adjusted gross profit (loss) as a percentage
ofgold incom e including realised non-hedge derivatives.
Interest cover: EB ITD A divided by finance costs and unw inding
ofobligations.
Monetary asset: An asset w hich w ill be settled in a fixed or easily
determ inable am ount of m oney.
Net asset value per share: Total equity per the balance sheet
divided by the shares in issue.
Net capital employed: Equity as defined above plus m inority
interests and interest-bearing borrow ings, less cash and cash
equivalents and other cash investm ents. W here average net capital
em ployed is referred to, this is the average of the figures at the
beginning and the end of the financial year.
Net debt: B orrow ings less cash and cash equivalents and other
cash investm ents.
Net operating assets: Tangible assets, current and non-current
portion of inventories, current and non-current trade and other
receivables (excluding recoverable tax, rebates, levies and duties), less
current and non-current trade and other payables and deferred incom e
(excluding unearned prem ium s on norm al sale extended contracts).
Net tangible asset value per share: Total equity per balance sheet
less intangible assets, divided by the num ber of ordinary shares
in issue.
Non-hedge derivative and other commodity contract gain
(loss): D erivatives that are neither designated as m eeting the norm al
sale exem ption under IAS39, nor designated as cash flow hedges
and other com m odity contracts.
Normal purchase normal sale (NPNS) exemption: H edge
contracts designated as m eeting the exem ption criteria under IAS 39.
Price received ($/oz and R/kg): Attributable gold incom e including
realised non-hedge derivatives divided by attributable
ounces/kilogram s sold.
Realised non-hedge derivatives: R epresents the current year
incom e statem ent effect of non-hedge derivatives that w ere settled
during the current year.
Region: D efines the operational m anagem ent divisions w ithin
AngloG old Ashanti and these are South Africa, Argentina, Australia,
B razil, G hana, G uinea, M ali, N am ibia, Tanzania and U nited States
ofAm erica.
AngloG old Ashanti_Annual Financial Statements 2006_Page 323
Related party: Parties are considered related if one party has the
ability to control the other party or exercise significant influence over
the other party in m aking financial and operating decisions.
Return on equity: Adjusted headline earnings expressed as a
percentage of the average equity, adjusted for the tim ing of
acquisitions and disposals.
Return on net capital: Adjusted headline earnings before finance
costs and unw inding of decom m issioning and restoration obligations
expressed as a percentage of average net capital em ployed,
adjusted for the tim ing of acquisitions and disposals.
Significant influence: The ability, directly or indirectly, to participate
in, but not exercise control over, the financial and operating policy
decision of an entity so as to obtain econom ic benefit from its
activities.
Total cash costs: Total cash costs include site costs for all m ining,
processing and adm inistration, reduced by contributions from by-
products and are inclusive of royalties and production taxes.
Am ortisation, rehabilitation, corporate adm inistration, retrenchm ent,
capital and exploration costs are excluded.
Total cash costs per ounce are the attributable total cash costs
divided by the attributable ounces of gold produced.
Total production costs: Total cash costs plus am ortisation,
retrenchm ent, rehabilitation and other non-cash costs. C orporate
adm inistration and exploration costs are excluded. Total production
costs per ounce are the attributable total production costs divided by
the attributable ounces of gold produced.
Unrealised non-hedge derivatives and other commodity
contracts: This represents the change in fair value, including
translation differences, of all open non-hedge derivative positions
and adjustm ents to other com m odity contracts from the previous
reporting date to the current reporting date.
Weighted average number of ordinary shares: The num ber of
ordinary shares in issue at the beginning of the year, increased by
shares issued during the year, w eighted on a tim e basis for the
period during w hich they have participated in the incom e of the
group, and increased by share options that is virtually certain to be
exercised.