AngloGold Speech At Mining Conference.

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 6, 2001

The following is the full text of a speech by AngloGold's (NYSE:AU) Director for Marketing, Kelvin Williams, delivered today at the Investing in African Mining conference held in Cape Town, South Africa.

AngloGold was created less than three years ago, from a group of South African deep-level, hard rock mines that had long lives, but limited growth potential laterally. With that character, the only feature that made AngloGold at all different from the slew of gold mining companies competing for the attention of investors thinking about taking a bet on a gold stock, was our apparently quaint view of the future. This vision, perhaps still slightly out of focus at that time, was that of a gold sector paying proper returns to its shareholders, dominated by three or four global producers that could command the attention of generalist portfolio managers. These producers would generate 50 to 60 per cent of the world's production, at far higher margins, and sell it to willing consumers in a modern market in which we would be competing with other value-enhancing companies, like pharmaceuticals and software.

To do this, we realized we'd have to transform ourselves into an entirely different organization -- a gold company concerned with our market as a whole, and with our product and with our results -- not a gold mining company with its traditional focus on engineering and mining targets alone. We established for ourselves three relatively innocuous-sounding objectives:

-- Re-focus our efforts on shareholder value, "inter alia" by modernizing the
South African production machine in the short-term;

-- Embark on return-enhancing and risk-spreading growth; and

-- Develop new and innovative markets for our product.

Here, at the beginning of 2001, I want to look at how far we've got towards those three goals and towards the transformation of the original company that those goals implied. Although 2000 was a tough year for AngloGold, characterised by disappointing operational performance, predominantly at a handful of South African operations, it was certainly not operationally disappointing across the broad spectrum of the new AngloGold nor had we had lost sight of our objectives. Indeed, it was a year that saw the successful completion of a number of changes and new ventures that have taken the company closer to meeting our original objectives and which will position the company well for growth in low cost production within a short while.

Reviewing our Performance

Modernizing the South African production machine

When AngloGold was created it was the largest gold producer by volume. But volume is only a measure of wealth creation if it enhances value, so the first challenge was to re-examine our volume in this regard and to eliminate high cost gold production. Since 1997, we have reduced annual gold production from the South African assets by 2.1 million ounces, or 28%. This has involved the sale or closure of 26 of the original 38 South African shafts, including the recently concluded sale of Elandsrand and Deelkraal.

In the remaining South African operations we commenced a programme to reduce costs through enhancing labour productivity. This programme, which is by no means complete, has produced results, with both volume and value labour productivity indexes improving during the past two years.

While we saw early gains in this process, we're at a stage now of seeking the next real step change in productivity improvement, something that is not easy to achieve, but which will come particularly through the focused application of new mining technologies and methodologies. In 2001 we have an R&D commitment of approximately R21 million, applied to a range of new mining, engineering, metallurgy and mineral resource management initiatives.

Return-enhancing and risk-spreading growth

The second objective was to spread ore body and country risk through value-adding growth. Over the last three years the company has acquired some two million low cost annual production ounces in North and South America, Australia and West and East Africa.

Besides two major organic growth projects in South Africa, AngloGold is well under way with major expansions at Sunrise Dam in Australia, a new mine at Yatela in Mali, and our interests in Morila, also in Mali, and Geita in Tanzania, will contribute some 20 million ounces of production, at an average cash cost of $175 to this company over the next 15 years.

This growth has been funded in part internally, and in part by new debt, and this funding of growth, as we said when we announced our results for the quarter last week, has slowed our cash flow and will do so for the next two years. This will only last until we begin to derive the full benefits of these acquisitions and major capital projects, and as we continue to close or dispose of under-performing and end-of-life South African operations. As you also saw in our fourth quarter results, some of these benefits are already beginning to be seen, with new acquisitions like Morila contributing 57,000 ounces at a cash cost of $88/oz, and contributing $6.5m to operating profit.

What gets lost in the analysis of our spread of assets is the fact that last year 50% of our production came at a cumulative average cash cost of $168/oz and 85% at $197/oz. Even in our deep level South African operations, like Great Noligwa, we saw almost 1 million ounces produced in 2000 at a cash cost of $144/oz ($127/oz in the fourth quarter). Our strategy to enhance returns and spread mining risk will lead to our continuing to grow the high margin ounces and continuing to phase out the high cost production -- in all of the regions where we operate.

Develop new and innovative markets for our product

Our activities in the area of market development are based on a long term commitment to our product, and a concern that the majority of the gold mining industry has neglected and continues to neglect its product in the market place. Until very recently, our product has largely been left to fight its own battles for the affections of consumers with little help from the world's gold mining companies who together annually place 2,500 tons of the metal onto the market. We believe that this is an untenable position, particularly in developed markets where gold is obliged to compete in a consumer environment where huge amounts of promotional and advertising expenditure are applied to persuade the developed market consumer to prefer products, which compete directly with gold.

The gold mining industry is an industry, which too easily takes the physical market for its product for granted. We feel somehow that we have a birthright with gold and that gold will always sell to someone somehow. We've even seen papers that have made the argument that the physical off take of gold is irrelevant to the price and should be left to get on with itself. AngloGold's view is rather different. We believe that a healthy physical off take is what sustains some kind of price floor in the market we're living through right now, and that if no-one takes responsibility for the health of that physical market, we might be in a great deal more trouble with the price than we are now. Forget for the moment about the notion of a conspiracy against gold, and worldwide plots between central bankers here, there and everywhere. We face a physical overhang of metal, and if we don't keep the physical markets healthy, we might all face a less happy long-term future in gold.

That said, we understand how difficult it will be for just one gold producer to make a decisive difference in the market for our metal. In broadest terms our aim is to influence positively the environment of the physical market for gold, to create new space, a new future for the metal:

-- to improve the desirability of gold to the modern consumer;

-- improve market sentiment towards gold;

-- increase the off take of gold.

Against this background, AngloGold management has recently spent time reflecting on progress thus far and reviewing and refining our strategy for the next three years. Whilst we've covered a lot of ground, much still remains to be done. We are the first to recognize, as we did at our earnings presentations to analysts and investors last week, that the four quarters from the fourth quarter in 1999 to the third in 2000 were less than remarkable and showed some of the strains that we've put the company under in getting it beyond its traditional South African roots. However, we see in our operating performance for the fourth quarter of last year clear signs of recovery -- operating profit was up by 9%, production was up by 2% and headline earnings by a modest but creditable 1%. The two most significant features of the quarter, however, were the sound performances of our major mines in South Africa -- Great Noligwa, Tau Tona, Kopanang -- and the spectacular showing by the offshore Africa region, clearly illustrating the contribution of our growth programme.

What do we take from our strategy review and an analysis of our recent performance? There are now four key pillars to AngloGold's strategic and business plans:

-- ensuring operational excellence in a portfolio of long life,

low cost assets, with diversified mining and country risk.

-- providing price security and revenue enhancement through a

forward sales programme, in which no more than 50% of five

years' production is sold forward over a ten-year period.

-- continuing to grow the market for our product, including

direct investment in downstream opportunities, based on

partnering with experienced players.

-- Pursue value enhancing growth and consolidation through joint

ventures, mergers and acquisitions that grow earnings rather

than simply ounces in the ground.

Operational excellence means ensuring optimal asset performance, including cost containment and cost reduction where possible, productivity improvement, and efficient capital allocation, based on a conservative view of the gold price. This has included:

-- asset rationalisation (as in 1998 and more recently, the sale

of Elandsrand and Deelkraal)

-- new acquisitions, where the emphasis has been on diversifying

mining and country risk and improving operating margins.

-- developing key projects to ensure organic growth (Moab

Khotsong in South Africa, Yatela in Mali, Sunrise Dam in

Australia), together with a programme to identify and

implement innovations in technology to support improvements in

rock breaking, gold recovery, and safety.

Breakthroughs in productivity and performance in the major engine room of the company -- the South African deep level operations -- will come through a continued commitment to a range of initiatives which have as their intent the modernisation of our South African production machine and continued improvement in safety performance. However, optimal asset performance is as much about getting back to basics and doing the simple things right the first time as it is about step changes in technology development.

Part of the process of ensuring that the operations achieve the level of performance required of them is setting realistic goals and ensuring budget integrity, based on a thorough understanding of the ore bodies which we are mining and with realistic gold price assumptions. We are forecasting total gold production for AngloGold for 2001 of 7.1 million ounces at a cash cost of $190 per ounce and a total production cost of $229 per ounce.

In our fourth quarter results we also indicated that we seek to better this outlook by reducing overheads by at least 10% during 2001. At our corporate office we have begun a process of rationalisation of activities and staff, while at the same time seeking to ensure that we have in place a corporate centre that properly meets the requirements of a global company in respect of management skill and experience. Thus while we are busy cutting costs, we are also currently building competencies that will enable this company to meet its strategic objectives and compete globally.

Price Security

AngloGold has consistently sold forward a portion of future production with the objectives of securing certainty in regard to future revenue and protecting the company from a fall in the spot gold price.

The company's policy is to hedge up to 50% of five years' forecast production, with some discretion for the Executive Committee of AngloGold to exceed that level where circumstances require (for example, in specific projects which might require higher levels of revenue security in their development, or in acquisitions or new developments where lenders specify a requirement of hedge cover to bank the project). We try to retain as great a degree of flexibility as possible in the treatment and management of hedge contracts, rather than regarding hedges as fixed and immutable obligations once entered into. The aim in pursuing active management of hedge exposure is not to increase the risk to the company, but rather to adjust the risk profile of the hedge in response to changing market conditions from time to time, to reduce losses that might flow from a mechanistic handling of hedge obligations with no regard to changes in market circumstances, and to maximize revenue from existing contracts.

Growing the market

The final key area of strategic intent is the development of the market for our product. The objectives of our market development projects are expressed at their simplest as being to:

-- Improve the desirability of gold to the modern consumer;

-- Improve market sentiment towards gold; and

-- Increase the off take of gold.

This has involved both support for the co-operative activities of the World Gold Council, together with AngloGold-specific initiatives in which the company has taken the lead in promoting the appeal of gold to modern consumers.

AngloGold's marketing programme has focused also on identifying opportunities for direct investment in new ventures in the downstream gold business, where the company can partner with established players to develop new business ventures that can generate value for AngloGold shareholders. We have embarked on investment in projects which we believe offer us not only the strategic opportunity to play a role in introducing new product and a new positioning for gold in modern markets, but also benefits from any commercial success of these initiatives through ownership in the business.

This has led to a portfolio of marketing activities organised as follows:

-- WGC support

-- AngloGold Strategic Marketing Projects:

- The Gold of Africa Museum

- Jewellery design competitions and new product development

- Research and Development

-- AngloGold Strategic Downstream Investments:

- OroAfrica

- GoldAvenue

I'll outline each of these briefly.

WGC Funded Projects

Our contribution to the WGC will increase to $12,98 million in 2001, compared to $6,99 million in 2000, in the context of a refocused and expanded WGC operating plan. The core functions of the WGC include:

-- market research

-- market development

-- market liberalisation

-- research and development

AngloGold Strategic Market Development Projects

The Gold of Africa Museum

The Gold of Africa Museum will be home to what many believe to be world's largest and most important collection of African gold artifacts. The world-renowned collection of African gold objects from the Barbier-Mueller Museum in Geneva will form the heart of the Museum's permanent collection. The collection comprises over 350 19th and 20th century gold objects from Mali, Senegal, Ghana and the Cote d'Ivoire. Purchased by AngloGold last year, it has been put into a not-for-profit company, dedicated to education and training. The collection will be expanded in future with new acquisitions of gold from other parts of Africa to represent the whole continent's gold history. It is intended that The Gold of Africa Museum will become a center for learning about African gold and Africa's unique tradition of goldsmithing.

Jewellery Design Competitions and New Product Development

AngloGold has sponsored a number of national and international jewellery design competitions in key gold markets, including Asia, India, Turkey and South Africa, some in collaboration with the World Gold Council. Other AngloGold-sponsored events have included exhibitions of gold jewellery collections showcasing gold in high-profile international fashion events such as the New York Fashion Week, exhibitions of gold antiquities from Colombia and Southern Africa, and our annual Riches of Africa jewellery design competition. Not only do these competitions and exhibitions encourage innovative gold jewellery design, but they also provide design and technical inspiration for new gold jewellery product for goldsmiths around the globe.

Later today, during the lunch break, we will show you the Gold Virtuosi collection, which was created in collaboration with the World Gold Council and the Vicenza Fair. Gold Virtuosi is the first global jewellery competition, and it attracted 3,000 entrants from 34 countries. The collection showcases global trends and innovations in gold jewellery design from around the world, and is really the best of the best.

Going forward it is our intention to dovetail our design competitions and the intellectual property that AngloGold acquires in these pieces -- from the Gold of Africa Museum collection to the Riches of Africa collection -- into new products for OroAfrica and GoldAvenue. Today we will launch some exclusive gold jewellery produced by OroAfrica that has been inspired by Gold Virtuosi. These will be on sale during Gold Virtuosi's stay in South Africa, which you can purchase if you wish. This marks the beginning of a process of synergy between our marketing initiatives and our commercialized projects that were previously simply gold image promotion.

Research and Development

Outside of marketing our product, in the area of new industrial applications for gold, AngloGold has sought to act as an initiator and facilitator, leveraging our R&D spend to the maximum. Foremost in this area is Project AuTEK, a joint venture with Mintek, where the focus includes:

-- New gold catalysts that are being tested for their catalytic

activity in oxidising carbon monoxide to carbon dioxide.

Initial test work indicates some success;

-- Pollution control. Mintek has concluded collaborative

agreements with national research institutes, aimed at

expanding gold catalysis research into the field of diesel

automobile exhaust emission control; and

-- Seeking a grant from the National Research Foundation to fund

Project AuTEK related research into the field of industrial

chemical reactions.

In order to promote an understanding that gold catalysts exist and have unique properties applicable in different fields, AngloGold and others are sponsoring an international conference on Gold Catalysis here in Cape Town during the first week in April 2001.

AngloGold Strategic Downstream Investments

OroAfrica

Last year, AngloGold took a 25% stake in OroAfrica, the largest manufacturer of gold jewellery in South Africa. The company employs 170 people and at present consumes an estimated six tons of gold annually at its new manufacturing centre here in central Cape Town. OroAfrica has a strong export focus and has established a 50/50 joint venture with an Italian company, Filk Spa, for the manufacture of gold chain jewellery in South Africa, specifically for export to the United States. Filk Spa is the largest and most technically advanced manufacturer of machine-made gold chains in the world, producing 42 tons of gold chain annually.

This joint venture is a positive move for AngloGold and is in line with our corporate strategy to extract value from gold beyond the current limits of mining -- down the product chain, where returns are more significant with the promise of real additional revenue for the company. In addition, the venture enables us to lead by example and make a positive impact in the gold jewellery manufacturing industry through improved efficiency, new and better products and services, and more effective distribution and retailing.

GoldAvenue

GoldAvenue was envisaged originally as a one-stop gold e-commerce site, offering the widest possible range of gold-related products and services. The venture sought to strategically reposition gold products to the modern consumer, and to add real value for shareholders in a commercial endeavour making money from the sale of gold through the internet.

Delays in the development of our B2C software, and the unfolding of a major reality check in B2C e-commerce during 2000 has provided us with an opportunity to revise and refocus our strategies in this project.

The GoldAvenue partnership will in the first instance move into a number of B2B ventures, which will service directly the existing bullion pipeline between our mines and refineries, and the gold fabricating industries in leading gold consuming countries. Software development in this regard is now complete, and roll out will begin imminently. Regarding the B2C side of e-commerce, we remain committed to a new and innovative shop front for gold products on the Internet and are in the process right now of settling both the best model and the initial consumer target for this.

Growth and consolidation

In 1997, at the time of the formation of AngloGold, virtually all of the company's gold production came from South African deep level gold mines. This quarter, 25% of our production and 45% of our EBITDA comes from outside of South Africa. The intention of this strategy is not, as some have characterised it, to get out of South Africa, but rather to accomplish four related goals:

-- to spread ore body risk by acquiring or finding significant

surface deposits;

-- to spread geographic risk (which will virtually always follow

the first goal);

-- to promote the consolidation of a highly fragmented industry

so as to optimise ore bodies and address a deeply inefficient

gold market; and

-- to put back together, in the search for value, the natural ore

bodies of the Wits Basin and elsewhere.

There is, of course, an important rider for all of us in this objective of growth and consolidation -- we can only achieve these objectives in the pursuit of real shareholder value. We will only take growth and consolidation opportunities if there are real advantages for our shareholders in the numbers. Whatever the physical rationalization or consolidation benefits might be of a transaction, every transaction has a walk-away price -- AngloGold will not pay a price for assets, which would destroy value. For this reason, we prefer mergers, which provide long-term benefits to shareholders of both companies, rather than acquisitions that trigger short-term market response and the payment of large premiums. Ultimately only one arithmetic formula determines the viability of consolidation, and that is the arithmetic of real returns for all shareholders involved.

I have sought in this presentation to review where we've come from and to sketch the strategic logic that is taking us forward. We face the challenge, both in AngloGold and the industry more generally, to explore and mine our metal using the highest standards of excellence -- ones that enrich shareholders and the communities in which we operate -- and to grow the market for our product in new and different ways. After a tough 2000, the AngloGold management team is looking forward to the challenges and opportunities of 2001.

END

Disclaimer

Except for the historical information contained herein, there are matters discussed in this news release that are forward-looking statements. Such statements are only predictions and actual events or results may differ materially. For a discussion of important factors including, but not limited to, development of the Company's business, the economic outlook in the gold mining industry, expectations regarding gold prices and production, and other factors, which could cause actual results to differ materially from such forward-looking statements, refer to the Company's annual report on the Form 20-F for the year ended December 31, 1999 which was filed with the Securities and Exchange Commission on April 18, 2000.