SOURCE: AngloGold Ashanti

April 15, 2005 12:10 ET

South African Government Issues Directive to DRDGold, Harmony and AngloGold Ashanti

JOHANNESBURG, SOUTH AFRICA -- (MARKET WIRE) -- April 15, 2005 -- The South African Department of Water Affairs and Forestry today issued a directive, as an interim measure, ordering three mining groups, DRDGold, Harmony and AngloGold Ashanti (NYSE: AU) to share equally the costs of pumping water at a number of shafts at Stilfontein Gold Mine and Buffelsfontein Gold Mines.

The directive follows the launch by AngloGold Ashanti earlier this week of an urgent interdict following the threat by DRDGold that it would cease funding the pumping of water at the shafts after placing its subsidiary Buffelsfontein into liquidation on March 22. DRDGold has been pumping water at Stilfontein under contract for several years. The consequences of a halting of pumping would have been the flooding of several Harmony shafts and AngloGold Ashanti mines in the Vaal River area.

The interdict cited as respondents Stilfontein, DRDGold, various DRDGold subsidiaries and the Ministers of Water Affairs, Minerals and Energy and Environmental Affairs. The purpose was to force the responsible mining companies to continue their pumping activities and the Ministers to take certain actions to ensure that these companies carry out their legal obligations.

It is believed that the costs covered by the directive total some R4.3m per month in total, though this figure is still to be verified.

AngloGold Ashanti is pleased that government accepted that the threat of environmental and economic catastrophe was sufficiently serious that it issued the directive.

We accept the interim arrangement designed to ensure that catastrophe is averted, knowing that the directive is an emergency measure and says nothing about parties' respective legal obligations into the future. However, we continue to maintain that the legal obligation to continue pumping rests with Stilfontein, DRDGold and/or its subsidiaries in liquidation.

The interdict application has been postponed, but will be pursued to completion to enable the court finally to determine legal liabilities and responsibilities. We believe that it would be untenable were a precedent to be set allowing mining companies to walk away from their environmental, health, safety and economic obligations.

We further believe, however, that all parties will have to participate in seeking a long-term solution to the management of underground water in the area. We will be willing participants in this.

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