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

Group attributable equivalent gold production decreased from 900,000 ounces for the quarter ended September 2011 to 811,000 ounces for the quarter ended September 2012.

At the South African operations, gold production decreased by 10 per cent from 428,300 ounces (13,323 kilograms) to 387,200 ounces (12,043 kilograms). The majority of this decrease was due to the illegal strike at KDC East and West together with the fire at Ya Rona shaft during the September 2012 quarter. KDC’s gold production decreased from 279,200 ounces (8,684 kilograms) to 238,300 ounces (7,411 kilograms). Beatrix’s gold production decreased from 84,700 ounces (2,636 kilograms) to 77,600 ounces (2,415 kilograms). South Deep’s gold production increased from 64,400 ounces (2,003 kilograms) to 71,300 ounces (2,217 kilograms).

At the West African operations, total managed gold production decreased by 11 per cent from 234,400 ounces for the quarter ended September 2011 to 209,300 ounces for the quarter ended September 2012. At Tarkwa, gold production decreased from 180,000 ounces to 169,400 ounces due to the temporary suspension of the heap leach facilities from 16 July to 9 August 2012. At Damang, gold production decreased from 54,300 ounces to 39,900 ounces due to lower grades, as mining in the high grade Damang pit was severely restricted due to safety factors.

In South America, gold equivalent production at Cerro Corona decreased by 12 per cent from 93,900 ounces for the quarter ended September 2011 to 82,700 ounces for the quarter ended September 2012. This decrease was due to the lower copper price relative to the gold price, as well as lower copper production.

At the Australasia operations gold production decreased by 9 per cent from 168,700 ounces to 154,200 ounces. At St Ives, production decreased from 115,000 ounces to 106,600 ounces due to an increase in low grade surface ore in the September 2012 quarter, replacing higher grade underground ore from Cave Rocks. Agnew’s production decreased from 53,700 ounces to 47,600 ounces, as production was negatively affected by poor ground conditions, particularly in the Main Lode area which slowed down production rates.

Income statement

Revenue increased by 3 per cent from R11,060 million (US$1,570 million) to R11,395 million (US$1,380 million). The average gold price increased by 14 per cent from R385,684 per kilogram (US$1,702 per ounce) for the quarter ended September 2011 to R439,597 per kilogram (US$1,655 per ounce) for the quarter ended September 2012. The average Rand/US dollar exchange rate weakened by 17 per cent from R7.05 in the September 2011 quarter to R8.26 in the September 2012 quarter. The average Rand/Australian dollar exchange rate weakened by 15 per cent from R7.44 in the September 2011 quarter to R8.56 in the September 2012 quarter. The average Australian/US dollar exchange rate weakened by 2 per cent from A$1.00 = US$1.06 in the September 2011 quarter to A$1.00 = US$1.04 in the September 2012 quarter.

Net operating costs increased by 16 per cent in rand terms from R5,404 million to R6,290 million, but decreased marginally in dollar terms from US$766 million to US$763 million. The weaker US$ and A$ exchange rates accounted for 42 per cent or R368 million of this increase. Total cash cost for the Group increased from R192,997 per kilogram (US$851 per ounce) to R243,143 per kilogram (US$916 per ounce) due to the lower production and the increase in net operating costs.

At the South African operations, operating costs increased by 15 per cent from R3,131 million for the quarter ended September 2011 to R3,592 million for the quarter ended September 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 R235,780 per kilogram to R296,205 per kilogram as a result of the increase in operating costs and the lower production.

At the West African operations, net operating costs increased by 17 per cent from US$132 million for the quarter ended September 2011 to US$155 million for the quarter ended September 2012. At Tarkwa, net operating costs increased from US$102 million to US$117 million. This was mainly due to annual wage increases of US$2 million, increased power and fuel costs of US$5 million and a US$4 million lower inventory credit in the September 2012 quarter together with an increase in tonnes mined. At Damang, net operating costs increased from US$30 million to US$38 million due to increases in power, fuel and explosives costs as well as an increase in tonnes mined. Total cash cost for the region increased from US$617 per ounce to US$754 per ounce due to the lower production and increased costs.

At Cerro Corona in South America, net operating costs decreased by 10 per cent from US$41 million to US$37 million. Total cash cost decreased from US$494 per ounce to US$474 per ounce, mainly due to a gold-in-process credit in the September 2012 quarter.

At the Australasia operations, net operating costs decreased by 8 per cent from A$142 million for the quarter ended September 2011 to A$131 million for the quarter ended September 2012. At St Ives, net operating costs decreased by 9 per cent from A$106 million to A$96 million in line with the lower production. At Agnew, net operating costs were similar at A$35 million. Total cash cost for the region was similar year-on-year at A$839 per ounce.

Operating profit decreased from R5,655 million (US$804 million) to R5,105 million (US$617 million) due to the increase in net operating costs.

Share based payments increased from R122 million (US$17 million) to R169 million (US$21 million) due to the net effect of new allocation charges for share-based compensation granted.

Exploration expenditure increased from R189 million (US$27 million) to R249 million (US$30 million) mainly due to timing of expenditure.

Feasibility and evaluation costs increased from R48 million (US$7 million) to R60 million (US$7 million) due to the reallocation of growth and project team costs from exploration expenditure as from the June 2012 quarter.

Non-recurring income amounted to R94 million (US$12 million) in the September 2012 quarter and included profit on the disposal of the Groups’ interest in GoldQuest Mining Corporation and Atacama Pacific Gold Corporation which amounted to R239 million (US$30 million). Profits’ were partly offset by business process re-engineering costs and costs incurred to combat the fire at KDCs’ Ya Rona shaft of R 33 million. This compares with non-recurring costs of R167 million (US$24 million) in the September 2011 quarter which comprised voluntary separation packages, business process re-engineering and restructuring costs at all the operations.

Government royalties decreased from R305 million (US$43 million) for the quarter ended September 2011 to R278 million (US$34 million) for the quarter ended September 2012, mainly due to lower profits at the South African operations.

Taxation decreased from R1,223 million (US$174 million) for the quarter ended September 2011 to R933 million (US$113 million) for the quarter ended September 2012. This decrease was in line with the lower taxable income.

Net earnings attributable to owners of the parent amounted to R1,424 million (US$171 million) for the September quarter 2012 compared with earnings of R2,055 million (US$293 million) for the September 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 R1,477 million (US$177 million) for the quarter ended September 2012 compared with R2,111 million (US$301 million) for the quarter ended September 2011.

Cash flow

Cash inflow from operating activities decreased from R5,057 million (US$717 million) for the quarter ended September 2011 to R1,449 million (US$172 million) for the quarter ended September 2012. This decrease was mainly due to lower profits in the September 2012 quarter, an investment in working capital compared with a release in September 2011 and higher royalties and taxation paid.

Dividends paid increased from R871 million (US$123 million) to R1,196 million (US$146 million).

Cash outflows from investing activities increased from R3,161 million (US$439 million) to R3,196 million (US$387 million). The September 2012 quarter included R514 million (US$64 million) being proceeds on the disposal of the Groups’ investment in GoldQuest Mining Corporation, Atacama Pacific Corporation and Evolution Mining Limited. In the September 2011 quarter investing activities included the second payment for the FSE project of R535 million (US$66 million).

Capital expenditure increased from R2,607 million (US$370 million) for the quarter ended September 2011 to R3,632 million (US$442 million) for the quarter ended September 2012. At the South Africa region, capital expenditure increased from R1,266 million to R1,471 million mainly due to the increase in expenditure at South Deep from R492 million to R624 million.

At the West Africa region, capital expenditure increased from US$73 million to US$101 million mainly due to increased capital stripping, fleet acquisition and expenditure on the water treatment facility. In South America, at Cerro Corona, capital expenditure increased from US$17 million to US$25 million mainly due to construction of an additional raise of the tailings facility. At the Australasia region, capital expenditure increased from A$73 million to A$113 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 amounted to R284 million (US$34 million) for the quarter ended September 2012 compared with a net cash outflow of R1,431 million (US$185 million) for the quarter ended September 2011. Loans received increased from R400 million (US$57 million) to R1,780 million (US$215 million) and loans repaid decreased from R1,905 million (US$252 million) to R1,593 million (US$193 million). The borrowings in the September 2012 quarter related to borrowings for the South African operations to fund working capital requirements. The balance in the September quarter includes R95 million loans received from non-controlling interest holders and R2 million relates to the issue of shares.

Loans received from non-controlling interest holders increased from R64 million (US$9 million) for the quarter ended September 2011 to R95 million (US$11 million) for the quarter ended September 2012 and related to Buenaventura’s contribution of 49 per cent of the capital expenditure on the Chucapaca project.

The net cash outflow of R2,659 million (US$327 million) in the September 2012 quarter compared with a cash outflow of R406 million (US$30 million) in the September 2011 quarter. After accounting for a positive translation adjustment of R75 million (US$26 million) on offshore cash balances, the cash outflow for the September 2012 quarter was R2,584 million (US$301 million). The cash balance at the end of September 2012 was R4.1 billion (US$494 million) compared with R4.4 billion (US$548 million) at the end of September 2011.