AngloGold Speech At Mining Investment Forum Conference.

Business Editors

DENVER--(BUSINESS WIRE)--Oct. 3, 2001

Kelvin Williams, Marketing Director at AngloGold Limited (NYSE: AU) delivered the following speech at the Mining Investment Forum Conference held in Denver, Colorado.

AngloGold: The road ahead

It is always an honor to be present at the Denver gold conference, being as it is a unique event in the gold mining business. This year's gathering is the more unusual for the sadness of the appalling events of the 11th of September and for the challenges that now face this remarkable country and by our associations, all of us who share values and loyalties with America. These challenges have brought their own changes to our market, and these days in Denver have been important for many of us to try to evaluate the dimensions of our changed world. I for one have found this valuable and appreciate this opportunity.

In this presentation I will deal first with the key characteristics of AngloGold today, second, with the highlights as we see them of the transaction we have proposed with Normandy, and third, with an indicative timeline for this deal.

Since its formation in early 1998, the AngloGold management team has pursued a strategy to grow the profit margin per ounce of gold mined, while seeking to diversify country and mining risk, in the pursuit of a lower cost of capital and higher market valuation. This has been achieved while reducing production by some 2.5 million ounces of gold, through the sale or closure of 24 shafts in South Africa, and acquiring some two million new low cost annual production ounces from open pit and shallow underground operations situated elsewhere in Africa, Australia and North and South America.

For the six months ended 30 June 2001, AngloGold produced operating profit of $234 million, net profit of $106 million. Headline earnings, before unrealized hedging activities, were $122 million ($1.14 per share or $0.57 per ADR) with $91 million declared as dividends. Our strategy to reduce risk through geographic and ore body diversification continues to deliver benefits, with production from outside South Africa in this six month period growing to 33%, operating profits to 46%, EBITDA to 51% and cash earnings to 56%. Despite a closing of the rating gap between ourselves and our North American peers, however, a north-south valuation divide continues to characterize the industry.

Together with our diversification strategy and ongoing improvements to operational and cost performance, we continue to invest in a number of major new projects that are expected to come into production over the next three years. In South Africa we have a new mine being developed at Moab Khotsong and mine extensions at Mponeng and Tau Tona. In Australia we are expanding Sunrise Dam, and here in Colorado we are expanding our joint venture operation at CC&V, which those of you attending the mine tour on Thursday will get to see. All of these projects are expected to have high rates of return and between them, are expected to produce some 15 million ounces over the next fifteen years at an estimated average life of mine cost of $160 per ounce.

The Minorco acquisition in 1999 and subsequent Geita and Morila acquisitions in 2000 were financed with debt. This, together with the funding of major capital projects from internally generated funds, leaves the company fully geared, with interest cover at 7.4 times. Interest cover is expected to improve to over 8 times by year-end.

As most of you know, we are at a critical stage in a number of our major expansion projects, with high capital expenditure levels planned for the next two years at around US$300 million per year, with this expenditure peaking in 2002. As has been our practice in the past, this will be funded out of internally generated cash while we continue to maintain our dividend policy and plan for modest earnings growth on current price and exchange rate assumptions. This short-term expenditure is balanced by the fact that from 2003 onwards we expect to generate significant incremental cash, from which we expect to repay debt, as capital expenditure falls to around US$150 million per year.

We have recently refinanced a portion of our debt with a new US$400 million facility, which significantly reduces our cost of funding. This facility carries interest at 75 basis points above LIBOR, which we believe to be the most competitive financing yet for a South Africa company, which is testament to our balance sheet integrity and a comment on our cost of capital.

AngloGold is a company that has from its inception targeted competitive returns on shareholders' equity and capital employed. In this respect, we also generate comparatively high cash flows per share, and provides a comparatively full dividend payout after providing for long-term growth in the business.

We are also a company that has taken seriously our responsibility to ensure the future health of the market for our product. In 2000, in support of our own market development initiatives, we acquired a 25% interest in OroAfrica, South Africa's largest manufacturer of gold jewellery, and a 33% holding in GoldAvenue, a primarily e-commerce business in gold, created jointly with JP Morgan and Produits Artistiques de Metaux Precieux (PAMP). In the same year, our marketing department was strengthened by the appointment of staff with consumer market and brand experience, supported by international consultants in key global markets.

Regarding GoldAvenue, our partnership venture into e-commerce and gold, we are taking deliberately slow but practical steps into this business. With the unravelling of ecommerce retailing in 2000, we switched our focus and energies to B2B development, constructing a unique bullion offer directly to second tier commercial banks and fabricators in large jewellery manufacturing economies. This business commenced in June this year with the first counter party in Italy, and will be rolled out before the end of this year to three or four major bullion consuming countries. We did not abandon our aim of a B2C business in gold but have sought other vehicles for its implementation. We believe that we have found a sound alternative access to this business in an alliance with a luxury catalogue business in the United States, Vivre, through whom we are about to launch both the GoldAvenue gold jewellery catalogue, and the gold jewellery website in November of this year. OroAfrica, our gold jewellery manufacturing investment in South Africa continues to grow its jewellery export business. Our greatest strategic interest with OroAfrica, however, lies with the potential to introduce innovative and potentially brandable gold jewellery through that partnership and this objective we are pursuing with them for the future.

Proposed Normandy Offer

Turning to our proposed acquisition of Normandy, let me indicate at the outset that until our Offer document is distributed, which is expected to be later this month, and all other filings concluded with the relevant authorities in Australia, South Africa and North America, it is difficult to deal in detail with the merits of the transaction as we see it, its impact on AngloGold, and the process for completing the deal. That said, I will seek here to highlight why we think the proposed merger is good for both AngloGold and Normandy.

The terms of the proposed offer, as announced on September 5th, are:

- 2.15 AngloGold shares for 100 Normandy shares, which at the time

valued Normandy at A$3.2 billion (US$1.6 billion) or A$1.42 per

share, representing a premium of 29% over Normandy's closing share

price on the ASX on September 4th, 2001.

The offer is subject to a number of conditions that we indicated in our announcement. I am pleased to say that one of these - approval from the South African Reserve Bank for the transaction - has already been met.

The combination of AngloGold and Normandy is expected to create the world's first truly global gold company. Following the transaction, the enlarged AngloGold is expected to be the largest gold producer in Australia and Africa and is expected to be a significant gold producer in North and South America. This profile is not matched by any other company.

AngloGold's offer to acquire the issued share capital of Normandy is driven by the following key strategic objectives, namely:

- Diversification and scale

- Operational synergies

- Enhanced growth opportunities

- Industry consolidation

- Financial impact

- Share re-rating

Diversification and scale

AngloGold has over the past 3 years successfully pursued both geographic and ore body diversification. The acquisition of Normandy is expected to further diversify AngloGold's portfolio of assets, both by way of operational diversity and through an increased presence in key gold producing regions around the world.

The combined pro forma annual gold production of over 9 million ounces is expected to reinforce AngloGold's position as the world's leading gold producer, whilst total pro forma reserves in 2001 will be over 100 million ounces and total resources and other mineralised materials will be over 400 million ounces.

Normandy's asset base, which includes joint venture operations and projects with AngloGold in Australia and Brazil (through TVX), is expected to provide the combined company with a significant operating and exploration presence in some of the world's best gold producing regions, in some cases expanding AngloGold's existing regional influence.

Operational synergies

Normandy's and AngloGold's complementary regional operating presence in Australia as well as in North and South America is expected to present the company with unique synergies and consolidation opportunities, particularly in the area of simplified corporate and management structures. The complementary fit of Normandy's exploration activities with those of AngloGold's is also expected to result in cost savings through the rationalisation of exploration activities in Australia, West Africa, North and South America.

We estimate that annual after tax savings of about US$25 million are achievable through rationalising overheads and exploration activities.

Turning to the broader picture of operational interaction, joint venture partners in a number of operations in both companies offer the potential for asset consolidation/exchanges. In these, the focus will be on pursuing the "one owner, one manager" model where appropriate. This is particularly the case with new growth projects involving important strategic questions, such as Boddington, where fragmented ownership has the potential to result in sub-optimal decision-making and duplicated cost.

Enhanced growth opportunities

In addition to near-term operating synergies, we believe the merged company should offer better returns due to its ability to be more selective in funding long-term growth projects, with only the most compelling projects amongst an increased portfolio receiving funding.

The transaction is expected to give the combined company a stronger and more focused position in potentially high-growth projects, such as Boddington. General growth opportunities may be enhanced through the consolidation of exploration activities between the two companies, unified management structures in certain joint venture relationships, and a greater capacity to fund new projects.

Industry consolidation

The gold industry's fragmentation has so far prevented most companies from achieving returns compatible with other sectors. We believe that one benefit of increased consolidation is a more rational approach by the larger companies to addressing marginal production, thereby being more responsive to the dynamics of the market for our product.

Following a successful transaction, AngloGold's increased asset spread and production profile should offer the company the flexibility to further rationalise its asset base by closing or disposing of lower margin operations and by acquiring new assets consistent with the company's improved portfolio.

Financial impact

Total production from shallow underground and surface mines is anticipated to increase from around 40% to around 56%. EBITDA from shallow underground and surface mines is expected to increase from 56% to around 70%.

The transaction is expected to reduce AngloGold's gearing, expressed as the ratio of net debt to total capital, from 30% to around 25%.

The transaction is expected to lift AngloGold's market capitalisation to approximately US$5.5 billion, thereby increasing the universe of potential institutional investors.

An increase in AngloGold's issued capital by some 48 million shares will almost double the free float of AngloGold's shares which should significantly enhance trading liquidity in Johannesburg, New York and, particularly, on the Australian Stock Exchange. The transaction may also improve the enlarged AngloGold's weighting in the indices of the various stock exchanges on which it is listed.

AngloGold has established a reputation as a high dividend payer, with an established practice of paying out most of its free cash flow to shareholders, after providing for growth. This is a practice we will continue.

Share re-rating

Since its formation in 1998, AngloGold has reduced its cost base, diversified its country and operational risk, enhanced returns to shareholders, and developed an international investor base beyond the specialist gold funds. We have seen some re-rating already.

In a context where the largest, most liquid international players will continue to command higher valuations, AngloGold is seeking through this merger to continue to enhance its share valuation over time. Management is fully aware that improved valuation will come only with delivery in the areas I have outlined.

Our proposed offer represents an opportunity for Normandy shareholders to become part of a truly global gold company, with the size, critical mass in key gold regions, and trading liquidity to lead in all aspects of our business.

Indicative deal timeline

We expect to lodge our Offer document and registration statement on Form F4 with the relevant authorities in mid-October, and to mail the Offer document to non-U.S. persons approximately two weeks later, and to U.S. persons as soon as the SEC declares the F4 effective.

This transaction will involve a vote of AngloGold shareholders and a Circular is currently expected to be distributed to our shareholders at the end of October. The meeting of AngloGold shareholders is expected to take place in November. We currently aim to conclude this transaction by mid-December.

In closing let me reiterate Bobby Godsell's recent comments on the transaction, namely that for AngloGold this deal represents a company transforming event, an important strategic move that improves our core asset base and future growth projects in each of the regions in which we operate. It further diversifies risk and enhances our earnings outlook, in what we believe to be a very exciting opportunity.

Ends.

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, 2000 which was filed with the Securities and Exchange Commission on April 23, 2001.