The board remains committed to guiding the strategic and entrepreneurial development of the group and supports the principle of collective responsibility for the success of the company.

The company is incorporated in Jersey, where there is no formal Code relating to corporate governance. Nevertheless, the board is strongly committed to the highest standards of corporate governance and has therefore decided to adhere, wherever possible, to the provisions of The Combined Code on Corporate Governance published in 2006 (the Combined Code), in the same way as if the company was incorporated in the United Kingdom. This report, together with the remuneration committee report and directors’ report, has been prepared by reference to the Combined Code. Except as explained below, the company has complied with the provisions set out in section 1 of the Code throughout the year ended 31 December 2008. Details relating to the remuneration paid by the group are contained in the report of the remuneration committee which can be found on page 68 of this annual report. In addition reference to the group’s environmental and social responsibility report can be found on the Social Responsibility page.

Every company should be headed by an effective board, which is collectively responsible for the success of the company.
The board remains committed to guiding the strategic and entrepreneurial development of the group and supports the principle of collective responsibility for the success of the company. The board has reserved, for its sole discretion, the finalisation and adoption of the group’s strategic plan, major fiscal policies including treasury and hedging policies, approval of the budget, approval of all mining development and any merger or acquisition.

The board undertook its annual evaluation exercise during the year to measure its own performance as well as those of its committees and extended the format to include the nomination and governance committee. During the year the board met four times formally and three times at short notice. Attendance at the meetings was as follows:

Where it is deemed appropriate, the chairman meets with the non-executive directors without the presence of the executive directors and during the year meetings were held by the chairman and the non-executive directors.

Appropriate directors and officers insurance cover has been obtained by the company in respect of legal action against the directors.

There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision.
In accordance with clearly defined parameters, the non-executive chairman, Mr Philippe Liétard, is responsible for the leadership of the board and to ensure effective communication exists between the executive and nonexecutive directors.

The CEO, Dr Mark Bristow, has been delegated the authority to manage the day-to-day administration of the group. A formal job description is in existence and this is reviewed annually by the board and the CEO.

The board should include a balance of executive and non-executive directors (and in particular independent non-executive directors) such that no individual or small group of individuals can dominate the board’s decision taking.
Currently the board comprises ten members, two executive and eight nonexecutive directors. The board believes that mining is a long-gestation business and as such justifies a longer period of service for non-executive directors than many industries and that reasonable periods of service are therefore needed for the stability of the board but that new appointments are needed from time to time to add a fresh perspective.

The board monitors compliance with the independence criteria included in the Code and save in certain instances set out below for (a) periods of service and (b) award of options and “restricted” shares, all non-executive directors meet the criteria. For the reasons set out below the board believes that the non-executive directors are independent.

(a) Currently Dr Paverd and Messrs Asher and Israel have all served as directors for more than ten years. The board has considered their objectivity and contributions and believes that these are still independent in character and judgement. Mr Asher and Dr Paverd have indicated that it is their intention to retire from the board at the next annual general meeting, scheduled for May 2009.

(b) Mr Asher continues to hold options in terms of the company’s share options scheme. These were awarded in 1998 and the board does not believe that this interferes with his independence. Each of the nonexecutive directors owned shares in the company during the year. The non-executive directors also received an award of restricted shares in addition to their directors’ fees. The board believes that this aligns their interests with those of other shareholders without compromising independence.

Meetings of the board’s committees were held regularly. Where appropriate, the chairman and the executive directors are invited to be in attendance. (Shareholders are referred to the report of the remuneration committee. See below on for details of directors’ shareholdings.)

The board has not adopted a procedure of requiring directors who have served for more than nine years, to be re-elected on an annual basis.

There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board.
The members of the nomination and governance committee during the year below:

In terms of the directors’ remuneration policy, Mr Liétard receives a fee as the group chairman and Mr Asher receives a fee as senior independent director and therefore no additional payment for services to the committee. Fees paid to Mr Cole for service to the nomination and governance committee for the year were US$10 000, while Mr Coleman’s fee of US$1 667 was pro-rated given his date of appointment. Mr Asher will retire from the board at the company’s May 2009 AGM.

During the year the nomination and governance committee met on several occasions to consider submissions relating to possible board candidates and resulting from these deliberations, which involved a series of interviews, submitted the candidacies of Messrs Coleman and Walden. After a formal process which included meeting with the full board, both gentlemen were elected non-executive directors on 3 November 2008. In addition, the committee continued to review the company succession planning procedure, and in particular, strategy and tactics regarding key management. This process involves executive and senior management within the group. A nomination and governance committee charter is published on the company’s website.

In accordance with the articles of association, both Messrs Coleman and Walden will be subject to re-election at the May 2009 annual general meeting.

In addition to the appointment of directors, the appointment and removal of the company secretary remains a matter for consideration by the board as a whole.

The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties. All directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge.
The board continues to operate in a field which is technically complex and directors are provided with information which enables them to fulfil their duties effectively. Visits to the mines, branch offices and technical presentations provided by management are used to further their knowledge in various areas of specialisation. It is the duty of the company secretary to ensure an effective flow of information between the board, its committees and the management of the company and the board has full access to his services. The directors, and especially non-executive directors have access to independent professional advice when it is deemed necessary.

The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.
The board’s evaluation procedure operates through a structured self assessment system allowing each director to rate the performance of the board and its committees and focuses on a number of key areas. The individual assessments are then scored and the results were tabled at the November 2008 board meeting for discussion. The board continues to believe that the exercise is beneficial. It was agreed at the November 2009 meeting that the next board assessment would involve a formal 360º process.

A formal session of the directors also assessed the chairman’s performance.

All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. The board should ensure planned and progressive refreshing of the board.
In accordance with the provisions of the Companies (Jersey) Law 1991 and the articles of association, directors are required to submit themselves to re-election. Any newly appointed director is subject to election by shareholders after his/her appointment. Thereafter, by rotation, the entire board is subject to re-election every three years. The articles of association specify neither an age limit for directors nor any restriction about the period of service.

Levels of remuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but a company should avoid paying more than is necessary for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.
This is dealt with in the report of the remuneration committee.

There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his or her own remuneration.
This is dealt with in the report of the remuneration committee.

The board should present a balanced and understandable assessment of the company’s position and prospects.
The Companies (Jersey) Law, 1991 and the Combined Code require, and the board acknowledges, that it is responsible for presenting a balanced and understandable assessment of the company’s and the group’s position and prospects. This extends to the preparation and publication of the annual report and any other release of information, price sensitive or otherwise.

The financial statements set out in this report have been prepared by management under the direction of the board in accordance with International Financial Reporting Standards and are based on accounting policies that the board considers appropriate, supported by reasonable and prudent judgements and estimates.

The directors are of the opinion that the financial statements fairly present the financial position of the company and group as at 31 December 2008, and the consolidated results of operations and cash flows of the group for the year then ended.

The directors have continued to adopt the going concern basis in preparing the financial statements because the directors are satisfied that the group and company have adequate financial resources available to ensure their continued operational existence for the foreseeable future.

The group has operated a code of ethics since its United Kingdom listing in July 1997. The code includes specific reference to the company’s financial managers and the chief executive officer. A copy of the code is available on the company’s website.

The company also believes that the following risk factors should be carefully considered as either individually or in a combination they could have a material adverse effect on its business:

• the profitability of our operations, and the cash flows generated by our operations, are affected by changes in the market price for gold which in the past has fluctuated widely;
  
• our mining operations may yield less gold under actual production conditions than indicated by our gold reserve figures, which are estimates based on a number of assumptions, including assumptions as to mining and recovery factors, production costs and the price of gold;
  
• the profitability of operations and the cash flows generated by these operations are significantly affected by fluctuations in the price, cost and supply of inputs;
  
• our business may be harmed if the Government of Mali fails to repay fuel duties owing to Morila and Loulo;
  
• our business may be harmed if the Government of Mali fails to repay Value Added Tax, or TVA, owing to Morila;
  
• we have invested in debt instruments for which the market has become substantially illiquid which leads to uncertainty over the recoverable value;
  
• we may not be able to recover certain funds from MDM Ferroman (Pty) Ltd;
  
• we may incur losses or lose opportunities for gains as a result of our use of derivative instruments to protect us against low gold prices;
  
• our underground project at Loulo, developing two mines at Yalea and Gara, is subject to all of the risks associated with underground mining;
  
• our success may depend on our social and environmental performance;
  
• actual cash costs of production, production results and economic returns may differ significantly from those anticipated by our feasibility studies for new development projects, including Tongon;
  
• we conduct mining, development and exploration activities in countries with developing economies and are subject to the risks of political and economic instability associated with these countries;
  
• under our joint venture agreement with AngloGold Ashanti Ltd, or AngloGold Ashanti, we jointly manage Morila Ltd, and any disputes with AngloGold Ashanti over the management of Morila Ltd could adver sely affect our business;
  
• our results of operations are adversely affected by increases in fuel prices, and we would be adversely affected by disruptions in the supply of fuel;
  
• the use of mining contractors at certain of our operations may expose it to delays or suspensions in mining activities;
  
• we may be required to seek funding from third parties or enter into joint development arrangements to finance the development of our properties and the timely exploration of our mineral rights, which funding or development arrangements may not be available on acceptable terms, or at all;
  
• we may not pay dividends to shareholders in the near future;
  
• if we are unable to attract and retain key personnel our business may be harmed;
  
• our insurance coverage may prove inadequate to satisfy future claims against us;
  
• it may be difficult for you to affect service of process and enforce legal judgments against us or our affiliates; and
  
• we are subject to significant corporate regulation as a public company and failure to comply with all applicable regulations could subject us to liability or negatively affect our share price.

Full details relating to these risk factors as well as those relating to our industry can be found in our Annual Report on Form 20-F for the year ended 31 December 2007 and the S-8 filed on 15 December 2008, copies of which is contained on our website.

The board should maintain a sound system of internal control to safeguard shareholders’ investment and the company’s assets.
The group maintains a business control framework that documents the key business risks, together with the related operational, financial and compliance controls. The business control framework is regularly reviewed and updated bymanagement, who report quarterly to the board on any issues which might affect the risks and controls. The board acknowledges that it has responsibility for the ongoing review and update of the business control framework and believes that, through the procedures noted above and below, it has complied with the requirements of the Code to review the effectiveness of the group’s internal controls at least annually. The company continues to adhere to the requirements of section 404 of the Sarbanes Oxley Act.

The company’s auditors, BDO Stoy Hayward LLP, also act as auditors for Loulo and Morila, and their findings from the audits are communicated to the audit committee.

AngloGold Ashanti’s internal audit department conducts regular audits of the Morila mine and copies of these reports are submitted to the company’s audit committee for consideration. The group does not have a separate internal audit department but executive management undertake regular audits of various parts of the Morila and the Loulo mines and details of their reports are submitted to the audit committee and board for comment. Financial and technical audits of the company’s branch offices and major assets are regularly conducted by group management.

The board notes that no cost effective system will preclude all errors and irregularities and so the group’s system of internal controls provides reasonable, but not absolute assurance, against material misstatement or loss.

The board should establish formal and transparent arrangements for considering how they should apply the financial reporting and internal control principles and for maintaining an appropriate relationship with the company’s auditors.
The company’s audit committee has been set up to review the company’s financial reports, internal control principles and risk management systems, review significant financial reporting judgements and for dealing with the appointment of the auditors and monitoring their relationship with the company and its management.

During a substantial portion of the year, the audit committee was comprised of three members all of whom were nonexecutive directors. In November 2008, Mr Walden was appointed to the audit committee. For reasons described earlier, the board considers that the members of the audit committee are all independent. Mr Asher and Dr Paverd will retire from the board at the company’s May 2009 AGM and at that time the membership of the committee will be reevaluated.

One of the members has considerable years of experience in the financial services sector, one has extensive experience in the mining industry and the other has a PhD in finance. The new director, Mr Walden, is a qualified chartered accountant. The board believes that this level of experience continues to be sufficient to meet the standards imposed by the Combined Code. If issues arose which were deemed outside the areas of expertise of the members, independent professional advice would be sought.

During the year the audit committee met six times and attendance was as shown in the table below.

In terms of the directors’ remuneration policy, Mr Asher receives a fee as the senior independent director and no additional payment for services to the audit committee. Fees paid to Dr Paverd and Dr Voltaire for service to the audit committee for the year were US$35 000 each and Mr Walden’s fee of US$5 833 was pro-rated.

The committee makes recommendations to the board in relation to the appointment, re-appointment and removal of the external auditors as well as the remuneration and terms of engagement of the external auditors. BDO Stoy Hayward LLP served as external auditors for the group for the 2008 financial year and their re-appointment will be recommended to shareholders at the May 2009 annual general meeting.

During the year, BDO Stoy Hayward LLP were paid US$677 760 (2007: US$802 793) for their services, whilst PricewaterhouseCoopers, the group’s previous external auditors were paid US$54 183 (2007: US$175 288) in respect of their sign off of the annual report on Form 20-F for the year ended 31 December 2007 and the S-8 filed with the SEC on 15 December 2008, as well as for work performed on internal controls related to section 404. No non-audit services were provided to the company by BDO Stoy Hayward in the year. The committee reviews and monitors the external auditor’s independence and the objectivity and effectiveness of the audit process. This is undertaken within the framework of a detailed audit charter. A copy of the audit charter is available on the company’s website.

The committee reviews the company’s published results, the effectiveness if its system of internal control, legal and regulatory compliance including the Sarbanes Oxley Act, and the cost effectiveness of the services provided by the external auditors.

The audit committee has implemented a policy regarding the provision, and pre-approval thereof, of non-audit services by the external auditors and this mandate is reviewed annually.

The committee meets regularly and this includes quarterly meetings which are used to consider and approve the company’s quarterly results. The external auditors are regularly invited to attend meetings to report on their activities.

The committee also meets with the external auditors, independent of the executive directors or management.

The Sarbanes Oxley Act required companies to establish “whistle-blower” systems. The geographical spread of the group’s activities, particularly in remote West African locations, makes the system complex. The first point of contact is the company’s legal counsel who upon receipt of such an issue being raised would employ independent consultants and pass the findings onto the senior independent director to pursue any alleged irregularity. Quarterly reports are submitted to the audit committee concerning any instances where complaints are submitted.

The audit committee has continued to oversee the group’s compliance with the requirements of section 404 of the Sarbanes Oxley Act.

There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place.

The board acknowledges responsibility for maintaining effective communication with all shareholders. The CEO, corporate communications manager and the company’s investor relations consultants prepare a quarterly report for the board detailing the activities and presentations given to shareholders. In addition, since September 2004 the company has employed international market intelligence experts to provide a global shareholder identification service which has greatly enhanced the focus of the company’s communication message.

While in general corporate communication with shareholders is conducted by the CEO, the chairman, at least quarterly, participates in an open forum with shareholders and stakeholders. In addition, the chairman leads a group of senior executives to the African Mining Indaba, one of the premier global mining conferences attended by a substantial number of global players in the mining and related industries.

Besides attendance at various industry conferences, a minimum of two roadshows during the year are undertaken to enable company representatives to interact directly with shareholders and interested parties. The board continues to use the internet for publication of announcements and to file these on its website to assist in communication with shareholders. In addition the board encourages shareholders to access the annual report from the website rather than having it sent by post in printed form. Our public relations department monitors and responds to all feedback received through our website. The structure and accessibility of our website is regularly monitored through a process of internal and external audits.

The board should use the AGM to communicate with investors and to encourage their participation.
The board believes that the annual general meeting is an appropriate forum for contact with shareholders and encourages their attendance and participation. In order to reflect the sentiment of shareholders at the annual general meeting, it is an unwritten policy that all resolutions should be considered by way of a ballot poll and the number of proxies received disclosed to members in attendance. At each annual general meeting all sub-committee chairmen as well as other non-executive directors are present to address any queries raised by shareholders.

Institutional shareholders should enter into dialogue with companies based upon the mutual understanding of objectives. It has been the policy of the company that twice a year lengthy roadshows are conducted by the CEO accompanied by various senior management where meetings are held with most of the company’s major institutional shareholders to brief them on the activities of the company. In addition after the publication of each set of quarterly results, the CEO follows up with meetings with many of the institutional shareholders. These roadshows are in addition to the company’s attendance at several key international gold mining conferences around the world. In the last year investor conferences attended were held in New York, San Francisco, Denver, London, Zurich, Hollywood (Florida) and Cape Town.

Institutional shareholders have a responsibility to make considered use of their votes.
The company is pleased to see the increasing trend of institutional shareholders now exercising their rights to vote at general meetings. In the past three years the percentage of shareholders present and voting has increased significantly.