Coverage Initiated on Gold Miner with Global Portfolio

In a Dec. 7 research note, analyst Andrew Kaip reported that BMO Capital Markets initiated coverage on AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) with a Market Perform rating and an $11 per share target price. "We like the improving outlook," he added. Over the past four months, the stock has risen steadily to where it now is trading in-line with peers.

Kaip highlighted two developments by AngloGold Ashanti that improve its profile as an investment. The first, which reduces corporate risk, is its having reduced its total South Africa exposure to less than 15% through a complete restructuring of assets in that country.

The second is the new CEO Kelvin Dushnisky's decision to approve redevelopment at Obuasi, "a move that stabilizes AngloGold production in the 3.3 million ounces range into the mid-2020s," Kaip indicated.

He noted that BMO, however, has concerns about the company. Over the next two years, AngloGold Ashanti will retire its Morila and Sadiola mines, and production will decrease at Geita and Siguiri. The full value of Obuasi likely will not be attributed until after a successful ramp-up, estimated for 2021. Further, the miner having reduced its jurisdictional risk related to South Africa may result in a "cyclical decline in gold production," Kaip pointed out.

With this potential scenario and the status of the company's assets looking forward, Kaip posed the question: "How much more is there left to be sweated out of the company's aging operating base?" To remedy the issue, he noted, AngloGold Ashanti must provide increased visibility and/or consider new opportunities, which BMO would like to see from CEO Dushnisky. It also would like to see solid execution at Obuasi.

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Disclosures from BMO Capital Markets, AngloGold Ashanti, December 7, 2018

IMPORTANT DISCLOSURES

Analyst's Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures
Disclosure 9B: BMO Capital Markets makes a market in AngloGold Ashanti in United States.

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