Quarter ended 30 June 2012 compared with quarter ended 30 June 2011

Group attributable equivalent gold production decreased from 872,000 ounces for the quarter ended June 2011 to 862,000 ounces for the quarter ended June 2012.

At the South African operations, gold production decreased from 447,000 ounces (13,889 kilograms) to 437,000 ounces (13,595 kilograms). The majority of this decrease was due to lower volumes and yields mined and processed at Beatrix. KDC’s gold production increased from 273,000 ounces (8,475 kilograms) to 280,000 ounces (8,698 kilograms). Beatrix’s gold production decreased from 98,000 ounces (3,048 kilograms) to 80,000 ounces (2,477 kilograms). South Deep’s gold production increased from 76,000 ounces (2,366 kilograms) to 78,000 ounces (2,420 kilograms).

At the West African operations, total managed gold production decreased from 237,000 ounces for the quarter ended June 2011 to 215,000 ounces for the quarter ended June 2012. At Tarkwa, gold production decreased from 181,000 ounces to 176,000 ounces. At Damang, gold production decreased from 56,000 ounces to 38,000 ounces due to lower grades, as mining in the high grade Damang pit was severely restricted due to safety factors. The pit is expected to be depleted in approximately 2 years’ time although significant ore reserve potential exists below the current floor of the pit, necessitating a push back as part of the Damang super-pit project. Production was further exacerbated by reduced capacity at the mill.

In South America, gold equivalent production at Cerro Corona decreased from 101,000 ounces for the quarter ended June 2011 to 85,000 ounces for the quarter ended June 2012, due to expected lower gold and copper grades and a lower copper to gold price ratio dictated by changes in market prices for gold and copper.

At the Australasia operations gold production decreased from 159,000 ounces to 148,000 ounces. At St Ives, production increased from 109,000 ounces to 111,000 ounces. Agnew’s production decreased from 50,000 ounces to 37,000 ounces. Production was negatively affected by poor ground conditions, particularly in the Main Lode area which slowed down production rates.

Income statement

Revenue increased by 19 per cent from R9,581 million (US$1,411 million) to R11,364 million (US$1,408 million). The average gold price increased by 27 per cent from R326,206 per kilogram (US$1,496 per ounce) for the quarter ended June 2011 to R414,642 per kilogram (US$1,600 per ounce) for the quarter ended June 2012. The average Rand/US dollar exchange rate weakened by 19 per cent from R6.78 in the June 2011 quarter to R8.06 in the June 2012 quarter. The average Rand/Australian dollar exchange rate weakened by 14 per cent from R7.18 in the June 2011 quarter to R8.16 in the June 2012 quarter. The average Australian/US dollar exchange rate strengthened by 5 per cent from A$1.00 = US$1.06 in the June 2011 quarter to A$1.00 = US$1.01 in the June 2012 quarter.

Net operating costs increased by 17 per cent from R5,124 million (US$755 million) to R5,973 million (US$740 million). The weaker US$ and A$ exchange rates accounted for 7 per cent or R338 million of this increase. Total cash cost for the Group increased from R177,934 per kilogram (US$816 per ounce) to R220,546 per kilogram (US$851 per ounce) due to the lower production and the increase in net operating costs.

At the South African operations, operating costs increased by 9 per cent from R3,074 million for the quarter ended June 2011 to R3,346 million for the quarter ended June 2012. This was due to annual wage increases, a 16.7 per cent electricity tariff increase, increased maintenance costs and normal inflationary increases, partly offset by cost saving initiatives at the operations. Total cash cost at the South African operations increased from R220,261 per kilogram to R248,503 per kilogram mainly as a result of the increase in operating costs.

At the West African operations, net operating costs increased by 25 per cent from US$122 million for the quarter ended June 2011 to US$152 million for the quarter ended June 2012. At Tarkwa, net operating costs increased from US$88 million to US$114 million. This was due to annual wage increases of US$4 million, increased power and fuel costs of US$4 million and a US$12 million lower inventory credit in the June 2012 quarter together with an increase in tonnes mined. At Damang, net operating costs increased from US$34 million to US$38 million due to increases in power and fuel costs. Total cash cost for the region increased from US$564 per ounce to US$722 per ounce due to the lower production and increased costs.

At Cerro Corona in South America, net operating costs decreased by 8 per cent from US$38 million to US$35 million. Total cash cost increased from US$408 per ounce to US$482 per ounce, mainly due to the lower equivalent gold sales.

At the Australasia operations, net operating costs increased by 1 per cent from A$135 million for the quarter ended June 2011 to A$137 million for the quarter ended June 2012. At St Ives, net operating costs were similar at A$103 million. At Agnew, net operating costs increased from A$32 million to A$35 million mainly due to processing higher volumes of low grade ore mined from the Songvang open pit in the previous year. Total cash costs for the region increased from A$858 per ounce to A$910 per ounce due to the lower production.

Operating profit increased from R4,457 million (US$656 million) to R5,391 million (US$667 million).

Share based payments increased from R123 million (US$18 million) to R194 million (US$24 million) due to the net effect of new allocation charges for share-based compensation granted.

Exploration expenditure decreased from R214 million (US$31 million) to R190 million (US$23 million) mainly due to timing of expenditure.

Feasibility and evaluation costs increased from R17 million (US$3 million) to R120 million (US$15 million) due to the reallocation of growth and project team costs from exploration expenditure in the June 2012 quarter.

Non-recurring costs increased from R101 million (US$15 million) for the quarter ended June 2011 to R135 million (US$17 million) for the quarter ended June 2012 and included voluntary separation packages, business process reengineering costs at all the operations and impairment of investments and assets.

Government royalties increased from R236 million (US$35 million) for the quarter ended June 2011 to R333 million (US$41 million) for the quarter ended June 2012 mainly due to the increase in revenue.

Taxation increased from R866 million (US$128 million) for the quarter ended June 2011 to R960 million (US$119 million) for the quarter ended June 2012. This increase was in line with the higher taxable income.

Net earnings attributable to owners of the parent amounted to R1,606 million (US$198 million) for the June quarter 2012 compared with earnings of R1,267 million (US$186 million) for the June quarter 2011.

Normalised earnings – net earnings excluding non-recurring items, gains and losses on foreign exchange, financial instruments and gains or losses of associates after taxation, amounted to R1,819 million (US$224 million) for the quarter ended June 2012 compared with R1,326 million (US$195 million) for the quarter ended June 2011.

Cash flow

Cash inflow from operating activities increased from R2,954 million (US$436 million) for the quarter ended June 2011 to R4,195 million (US$514 million) for the quarter ended June 2012 due to higher profits in June 2012 and a higher release of working capital, partly offset by higher royalties and taxation paid.

Dividends paid decreased from R7 million (US$1 million) to R2 million (US$nil).

Cash outflows from investing activities decreased from R8,030 million (US$1,185 million) to R3,362 million (US$418 million). In the June 2011 quarter investing activities included the buy-out of non-controlling interest holders at La Cima and Ghana of R1,243 million (US$184 million) and R4,520 million (US$667 million) respectively.

Capital expenditure increased from R2,285 million (US$336 million) in the June 2011 quarter to R3,330 million (US$414 million) in the June 2012 quarter. At the South Africa region, capital expenditure increased from R1,169 million to R1,463 million mainly due to the increase at South Deep from R472 million to R643 million. At the West Africa region, capital expenditure increased from US$69 million to US$89 million mainly due to increased capital stripping and fleet acquisition. In South America, at Cerro Corona, capital expenditure increased from US$16 million to US$21 million mainly due to construction of the tailings facility. At the Australasia region, capital expenditure increased from A$56 million to A$95 million, with the majority of the expenditure on underground development at St Ives, open pit fleet acquisition and a new tailings storage facility.

Net cash inflow from financing activities decreased from R2,795 million (US$404 million) in the June 2011 quarter to R371 million (US$46 million) in the June 2012 quarter. Loans received increased from R3,927 million (US$570 million) to R6,232 million (US$793 million) and loans repaid increased from R1,185 million (US$174 million) to R5,905 million (US$752 million). In the June 2012 quarter loans received and repaid related to the refinancing of an offshore facility which expired in May 2012. The June 2012 quarter also included non-controlling interest holders’ loans received of R34 million (US$4 million) and shares issued of R10 million (US$1 million). The higher net loans raised in the June 2011 quarter were due to draw-downs to partly fund the purchase of non-controlling interest holders in La Cima and Ghana.

Loans received from non-controlling interest holders decreased from R47 million (US$7 million) in the June 2011 quarter to R34 million (US$4 million) in the June 2012 quarter and related to Buenaventura’s contribution of 49 per cent of the capital expenditure on the Chucapaca project.

The net cash inflow of R1,201 million (US$142 million) in the June 2012 quarter compared with a cash outflow of R2,288 million (US$347 million) in the June 2011 quarter. After accounting for a positive translation adjustment of R315 million (negative US$27 million) on offshore cash balances, the cash inflow for the June 2012 quarter was R1,517 million (US$115 million). The cash balance at the end of June 2012 was R6.7 billion (US$795 million) compared with R4.3 billion (US$631 million) at the end of June 2011.