AngloGold Ashanti's (AU) CEO Alberto Calderon on Full Year 2021 Results - Earnings Call Transcript

AngloGold Ashanti Limited (NYSE:AU) Full Year 2021 Earnings Conference Call February 22, 2022 7:30 AM ET

Company Participants

Stewart Bailey – Chief Sustainability & Corporate Affairs Officer
Alberto Calderon – Chief Executive Officer and Executive Director
Christine Ramon – Chief Financial Officer and Executive Director
Marcelo Godoy – Chief Technology Officer

Conference Call Participants

Jared Hoover – RMB Morgan Stanley
Dominic OKane – JPMorgan
Adrian Hammond – SPG Securities
Patrick Mann – Bank of America
Leroy Mnguni – HSBC

Operator

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti Full Year 2021 Results. All participants are currently in listen-only mode, and there will be an opportunity to ask questions later during the conference. [Operator Instructions] Please also note that this event is being recorded.

I would now like to turn the conference over to Mr. Stewart Bailey. Please go ahead, sir.

Stewart Bailey

Great. Thanks very much, Chris, and welcome everybody to our full year 2021 results call. We've got the expert team present, Alberto and Christine will run you through the presentation and we'll take questions immediately after. I'd ask you all, before we start the presentation, just to look at the Safe Harbor statement, which is in the back. It's got important information concerning forward-looking statements and I'd ask you to consult it when you have a minute. Alberto?

Alberto Calderon

Thank you, Stewart. Good day everyone. We ended the year with our all injury frequency rate at 2.13 injuries per million hours worked, which remains well below the ICMM member average. It is also worth noting that injury severity continues to decline. We did have two fatalities in the first half of the year, too many is always unacceptable and we are working hard on our major hazards to minimize the probability that those events happen again.

We're making progress, as I said, on our revitalizing the safety strategy, which is focused on the control needed to eliminate major hazards that – those that create significant harm or death. What that means is that each person on every site knows by heart the three or four major hazards are most likely to cause fatalities and what is needed to prevent them. This is crucially eliminating more accidents and especially fatalities from our sites. Our emphasis on COVID-19 remains on safely ensuring business continuity. We're also working with our host governments and communities to provide healthcare support, and other assistance in areas that are feeling strained from the pandemic. About 80% of the workforce was fully vaccinated by the end of the year. This excludes booster shots. These higher vaccination levels will be a significant plus for our employees and our business.

We published our inaugural Climate Change Report in December aligned with TCFD recommendations of the Task Force on Climate-Related Financial Disclosures. The report highlights the way we're being proactive and transparent in mitigating current and future climate risks and the measures we're taking to strengthen the climate resilience of our business, our value chain partners, host communities and the environment in which we operate. We also join our peers in the ICMM by committing to a target of net zero Scope 1 and 2 emissions by 2050 and to accelerate action on Scope 3 emissions.

Soon some may remember that we set our first decarbonization targets in 2008 for a 30% reduction in emissions intensity by 2022. We reached the goal four years early. In fact, we ended last year with emissions intensity at full 47% lower. The picture and absolute emissions is even better close to 70% down from the base set in 2007. These reductions are due to changes in our asset mix as well as from energy efficiency and fuel switching projects, but we know there is more to do. Watch the space for our 2030 targets, which were in the advanced stages of development, I hope to release this in the coming months.

We're pleased to see a continuation of our operating parameters continue to stabilize, especially the 12% half and half gain from our operations excluding Obuasi. It's encouraging to see the improvement underpinned by strong performances across most of our assets, which was driven by underground grades improving 19% half and half. We achieved our revised production and capital guidance and cost guidance was achieved when adjusting for the impacts of COVID-19. Reinvestments in our bigger assets, Geita, Tropicana and Iduapriem have tracked well and remain on schedule, but there is a huge amount to do to close the gap between this performance and what each asset should be.

Our sites are better resource now to deliver on their plans. We continue to scrub our operating and capital budgets and just last week we launched our full asset potential process at Sunrise. While we take time to get to where we want to be, you should start to see an improving trend and we have no time to waste. Cumulative inflation for the current year-to-date is estimated to be around 8% with increases across most categories. While there are encouraging signs in the evolution of the pandemic, it impacted production by around 47,000 ounces last year and all-in sustaining cost by $34 an ounce.

The absolute rise in AS, all-in sustaining costs last year was driven mainly by the 57% increase in sustaining CapEx. Despite the scale of the investment program and impact of COVID and the Obuasi suspension, we still generated $104 million of cash flow. That means are balancing a solid position with gearing still very low and liquidity strong. Our final dividend of US$0.14 takes the payout for the full year for $0.20. I'm also happy to report that Obuasi has successfully resumed underground mining and we have concluded the Corbis transaction. Just probably to clarify the cumulative inflation to 2021 was 5%, we expect an 8% inflation in 2022.

Key metrics. Here is a snapshot of some of the key operating and financial metrics. I don't intend on going through in detail but let me draw your attention to some key points. Let's start with capital, which was almost 50% as we push ahead with our reinvestment strategy and the ongoing compliance with TSF regulations in Brazil. We will also continue to spend at Obuasi Phase 3 without the benefit of any meaningful production. Exploration was also sharply higher consistent with the aim of improving our ore bodies, which I will cover later in more detail. You'll see the impact of the increased investments in our cost and cash flows, which were also impacted by the lower production and lower price.

The African overview. Kibali continues to be a steady performer with production flat on year. We also saw depletion more than replaced with a marginal increase in ore reserve. Iduapriem's production was lower as expected as we cut – as we strip Cut 7 ahead of accessing higher block – higher grade Block 7 and 8 later this year. Higher all-in sustaining costs reflect near-term investment in waste stripping and on new TSF. Exploration was a highlight adding about 900,000 ounces of new ore reserve pre-depletion. Siguiri showed a mark improvement, a combination of better grades and higher throughput as we ramp up the processing plant, i.e., was better year-on-year and we expect further improvement as we ramp up delivery of oxide over plum Rock 2. [Indiscernible] production was lower for the mine plan as we continue to develop two new mines on the property at Nyamulilima, and Geita Hill East.

I'm encouraged that development of the open pit is ahead of schedule. We see mine ore increasing to this year, accounting for roughly 50% of gold production in 2022. Geita has another successful year on the exploration – had another successful year on the exploration project adding 800,000 ounces before depletion with strong additions in Nyamulilima and Geita Hill East. In fact, this is the fourth consecutive year our reserve has grown net of depletion with ore reserves growing 112% in the last four years, from 1.25 million ounces to 2.65 million ounces, demonstrating the quality of this world-class ore body that we see driving Geita to be a multi decade mine. We expect Geita to revert the steady state operations next year with annual production, north of 500,000 ounces.

Latin American overview. It was a challenging year across these operations as COVID-19, and its second quarter affects negatively impacted operations. But you saw stronger second half with production of 18% over H1, but they are operating well below potential. We made the call to scale back plant throughput to keep with our permitted tailing limits, while we fast track the transition to dry stacking. This combination of lower production and additional capital contributed to abnormally high all-in sustaining unit cost.

We spent about $140 million of TSF conversion in 2021, a peak year, but which will continue to taper into 2025. As a result, all-in sustaining unit costs will trend down once the transition to dry stacking is complete.

AGA Mineração reported production of 331,000 ounces compared to the 362,000 achieved the year before. This is largely due to the underperformance of CDS mine, which will now be managed by the Cuiabá operating team. The Cuiabá is operating very well and we expect it to continue operating well in 2022.

Capital for the period was $61 million, which added $740 announced to all-in sustaining costs.

Serra Grande's performance was significantly lower at 83,000 ounces relative to be 114,000 ounces reported last year. Cost included additional capital required for the TSF resulting in ASC increasing to $2,200 per pound. And that is clearly not comparable to the previous year.

So, in 2021 Serra Grande operated with limited mining capacity due largely to COVID impacts. And the restriction is related to moving personnel too from the site. We saw operating improvements, however, in H2 largely due to expanded on site accommodations that gives us improved flexibility for staff rotations and changing COVID regulations.

Australia overview. Australia's production shortfall was largely due to the wall failure in the Boston Shaker open pit, which we highlighted in Q2. And great reconciliation challenges at Sunrise Dam during the first half of the year. Both of them have been sold in the second half and hence we expect better 2022. A stronger Aussie also impacted cost. It was pleasing to see however that the asset recording a strong second half of the year, both asset it's improving by about 21% when compared to the first half.

At Tropicana material movement in the open pit was 21% lower than planning 2021, primarily to the severe shortage of skilled operators and maintainers, exacerbated by international and state COVID border closures, coupled with a booming sector in Western Australia that has continued in this year. Hopefully the borders will be open in March 3, stay tuned for that one.

The mine plan was adjusted to mitigate this shortfall and reduce the impact on gold production. Progress in the lower priority bulk area soft as a consequence resulting less waste stripping of cuts backs being carried out. The impact of lower stripping is typically failed one to two years out and not in the current period. It is extremely important for future years, particularly 2023 and 2024 as the pits are sequenced optimally and the waste stripping is carried out on schedule. So hopefully when they reopen, we will be able to recover what we have lost in the past months. So, this will be a focus in 2022.

At Sunrise Dam gold production was 226,000 ounces against 256,000 last year. This reflects the unfavorable grade reconciliations in the underground mine, which was flagged in the first half.

All-in sustaining cost was consequently higher compared to the prior year.

Mining in the Golden Delicious open pit is progressing well. And this transitional material is being stockpiled and blended with undergrad ore and will contribute to high production. If you compare again, the first half with the second half, in the second half we had sold most of the reconciliations issues and you would have seen an increase in production of about 20% from about 107 to 127. And so we expect probably that second half to be replicated into the two halves of 2022.

We have been focused on improving our flexibility at Sunrise Dam investment strategy. 2021 saw Sunrise Dam added 700,000 ounces of mineral resource and 400,000 to ore reserves in 2021 pre-depletion. Lastly, we have established a testing to undertake a full asset potential review of the portfolio. The objective of this initiative is to complete a detailed analysis of each asset, including mine design and key operating parameters, to understand the reasons for the gap between current and best possible performance. Sunrise has been identified as the first site to undergo the process and the review commences earlier this month.

Moving to Obuasi update, we would recall we started underground mining in October. Since then the recent plan has tracked to schedule. In fact, the processing plan has achieved at 2000 tons per day in January. You recall we've said that we will want to be by 4,000, which is the limit of the current plan by June. So I think we're well on track.

Areas of assessment completed in Group stands low, Block 8 lower and the decline that stands to the stopes and then re-sequence and release for mining at Block 8 lower pro billing is ongoing and we expect to start releasing those stopes in the coming month. Phase 3, which runs through end 2023 is also tracking the plan. This includes upgrading the KMS shaft and material handling system and new ventilation shaft underground pump stations and refurbishment in the BSVS sub-shaft.

So where does this place us for the year? Within production between 214,000 and 216,000 and an all-in sustaining cost of $1,250 to $1,350 per ounce. We see the annualized production rate in Q4 at about 320,000 ounces to 350,000 ounces. We expect annual production to remain around that level in 2023, until Phase 3 is completed late next year, which will allow a step up to 5,000 tons per day. With all three phases of the project complete, production from 2024 to 2028 is anticipated to average between 400,000 and 450,000 ounces at all-in sustaining costs of around $900 to $950 an ounce, a truly world-class mine.

Exploration is foundational to our business. This slide shows exactly why we should all be excited about the potential this company has to offer if we take a step back to provide the context. We spent the better part of the last decade, showing up a wobbly balance sheet that the leveraging was understandably at the expense of some reinvestment. With our balance sheet now significantly stronger and our portfolio significantly simpler, we can safely turn to reinvesting in our core – in our orebodies.

We're in the midst of a program to increase investment in Ore Reserve, development and brownfield exploration to increase reserve conversion, extend reserve lives, improve mining flexibility, and upgrade knowledge of our orebodies. This use of incremental sustaining CapEx will we believe unlock talent value from within our existing portfolio. We've made strong progress apart.

We've had a cumulate addition over the last two years of 8.7 million ounces of Ore Reserve, coming into our inventory at only $68 an ounce. This compares to recent M&A multiples about $300 an ounce. Our Ore Reserve inventory has grown to the 3% over this period. And given the resource base we sit on, we expect to leverage this to grow Ore Reserve further.

Last year alone, we added 2.7 million ounces of Ore Reserve before depletion, even more impressive, we added more about 10% more ore tons and 44% more ounces to the proved Ore Reserve category. This is at first quarter grades when compared to our peers and bodes well for medium term future. On the greenfield front, we declared the made in Mineral Resource of 3.4 million ounces at Silicon Valley in Nevada.

So let's move to Nevada. We completed the Corvus acquisition last month, giving us a prime position in the largest new gold district in Nevada. Our aim is to use this foothold to establish a meaningful, low cost, long-life production based over the medium term. This consolidation has the potential for significant synergies. From economies of scale and integrated infrastructure, including order rights, adjacent concessions and processing facilities.

Our conceptual development plan for the district envisions the North Bullfrog deposit previously owned by Corvus being developed first with initial production in three years. This will be followed by Silicon, which is at 3.4 million ounce of resource and prime to grow further. And then potentially took the Merlin target near Silicon. The timing for mining activities at the Mother Load deposit is expected to commence only in the long-term after the company completes additional work. We see these deposits being developed in a modular fashion. Mine initially as open pits and process using heat bleach and gravity recovery were applicable. This suggests low capital intensity to develop in a stage fashion, a district expected to yield upwards of 300,000 ounce of annual production for over 15 years at a Tier 1 cost structure.

Sulphide processing and underground mining will be evaluated in the longer term. Our technical team has initiated its evaluation of the Corvus resource. For 2022, multiple activities are planned to take place in the district. Reserve conversion drilling at North Bullfrog and Silicon, pre-feasibility at Silicon and commencing a concept study for the Merlin deposit, permitting for North Bullfrog will start before midyear. Importantly, given the various deposits across the tenement, our approach to bringing these deposits to account will take place over a number of years in a stage and the risk manner.

Unlocking value, we have reinforces the leadership team with three key external appointments in recent months and a significant experience in transforming talent management, business improvement, and mine planning to an already seasoned group of existing executives. Terry Briggs, a 30 year veteran of the industry and currently Vice President Planning at Newmont, is the new Chief Development Officer. He will have oversight of planning, exploration and business development, and he would be one of the few CVs I know that has experiences in all of those.

Lisa Ali who joins in April of 2022, also as Chief People Officer after a long career with senior leadership roles at British Petroleum, and most recently at Newcrest. And Marcelo Godoy appointed in November, last November as Chief Technology Officer from a senior leadership role at Newmont, for nine years, like he headed up exploration there, will provide further inputs to the operating model and to the really the full potential review that we have embarked on.

You will have also seen that Christine Ramon, our CFO today, we announced that after seven years and a pillar of strength to the company during her role as interim CEO, will take early retirement in June to spend more time with her family. Two slides ago, I talked about how the balance sheet was strengthen the past years. And that is the biggest legacy that Christine heaves to AGA and her team is a strong balance sheet, the fabulous debt profile including the last 700 million of some months ago, good relationship with credit rating agencies. Without that, we really could not progress the plans that we have right now. So she deserves this rest, but she, in the end, it's the legacy that she leaves behind. And we will be grateful for that. We wish her the very best.

Core priorities, I said from the beginning, we’ve back to basic, I approached six months in the CEO role, our median objectives remain clear, narrow or focus on cost competitiveness to sharpen operational performance and project execution, to improve cash conversion and to offer a compelling investment proposition.

As I mentioned last year, we designed the operating model for the organization and also the organizational structure who supports it. This was campus with employees late last year ahead of our restructuring across the business footprint. We've now implemented it. This is a profound change for our business whereas functional support rose used to reside at three or four places in the organization. They are now at only two places at the center or corporate at the business unit level.

Corporate sets policy and standards and they provide assurance. The business units have the resources in their direct control to execute their plans and deliver their budgets on a day to day basis in line with these standards. This kind of restructuring inevitably results in the removal of certain roads, we limited our retrenchments by offering voluntary severities packages and in the end, our central function structures reduced from 526 positions in 2021 to 311 position at the end of January 2022.

We estimate and let’s say NPV savings about $800 million and a 5% discount or yearly of $40 million. Aside or much more important than the cost savings we have what I believe is a far more efficient and effective structure. We’re eliminating duplication and unnecessary work and ensuring that the right people are in the right place with the right accountabilities and the right responsibilities.

Full asset potential review with the operating model in place, we now move on to establish a testing to undertake a full asset potential review across the portfolio. Across functional team so specialists led by our Chief Technology Officer, Marcelo Godoy started the process of assessing the full potential of our operating assets.

I will talk you through this process in more detail shortly. Production and cost in parallel to this process, I have a team conducting a productivity improvement and cost review. This is focused on removing all costs that are not aligned to our key strategic imperatives. These steams are carefully scrutinizing the 2022 plans to ensure we stay on top of the issues and delivering our commitments.

The steam is scrubbing capital and operating costs and establishing strength, stretch targets, which will also start to get at that potential of our assets. And lastly, and vital to our long-term success is continually improving our overall social license to operate. We’re working on safety. We’re continuing to respond to our host governments and community needs and making sure we progress on decarbonization plans. All this is vital to our long-term success.

Full asset potential review process, we have started the process of assessing the full asset potential of our operating size. This is very important. This process will be site led, site owned with the overall program design and coordinated by Marcelo Godoy, our new CTO who has significant experience with these type of programs. This will involve a detail analyst of analysis of each asset into the mine design and key operating parameters to understand the reason for the gap between current and best possible performance.

These full assessments of each asset will take approximately three months and will result in identifying key areas of performance improvement to be implemented over the ensuring 18 months to 24 months. So we’re talking about looking at mine planning processing methodological recovery, labor productivity, external spend, procurement, capital spend, all of the key levers that really will be able to and then we’ll identify the Tier-1s will enable us to make a step change in each of the assets. As I said, this process will ultimately be owned by each site leadership team. It will be tracked until the full value of initiatives is realized. [Indiscernible] and security are the first caps of the rank.

I will now hand over Christine to cover the financial performance. Thank you.

Christine Ramon

Thanks, Alberto. And moving onto the cost performance, our cost performance in 2021 reflects the continued reinvestment across our portfolio. Notably Obuasi, Iduapriem, Geita and Tropicana. It also reflects significant investment entailing compliance in results. Our overall focus remains on improving our operational performance underpinned by the operating model changes, cost discipline, and the full asset potential project.

Total cash costs increased 22% or $173 an ounce to $963 an ounce. This was mainly due to lower grades and stockpile draw downs at certain operations. The second half reflected an 8% drop in cash costs to $925 an ounce on the back of a 12% increase in production from our operating assets excluding Obuasi and that was helped by underground grades.

Inflationary pressures were partially mitigated by weaker local currencies, lower royalties and higher silver byproduct contribution. Our proactive supply chain strategies include holding three to six months inventories of consumables and spares delayed the inflationary impacts and enabled business continuity during the year.

We are closely monitoring the sea freight market, given ongoing capacity constraints, which are squeezing lead times on deliveries as well, freight and logistics costs. We’ve taken a proactive posture on managing our supply chain since the onset of the pandemic and we continue to do that to ensure resilience and continuative supply.

Open pit grades were 26% lower year-on-year with most operations affected other than Siguiri and Sunrise Dam. Recovered grades from underground with 3% higher year-on-year with great improvements reflected at Geita and Kibali, which more than offset lower grades in results Sunrise Dam, and Cerro Vanguardia. The strong recovery at Sunrise Dam was especially pleasing after the negative grade recon in the first half. The reinvestments in our sites, the highest geological potential to extend life and improve flexibility remains a key priority.

Sustaining capital increased by $281 million or 57% mainly due to the tailings investment, as well as ongoing stripping at Tropicana and Iduapriem. All in sustaining costs were $1,355 an ounce and 31% year-on-year and driven by the higher sustaining CapEx and all recognized in cash costs that include an estimated $34 an ounce COVID-19 impact and a $55 an ounce impact for the Brazil tailings and compliance.

Moving on the balance sheet. Our balance sheet strategy is based on disciplined capital allocation and self funded improvements in balance sheet over the long-term. Adjusted net debt of $765 million at year-end is down 76% from its 2014 peak all without any equity raise and finance costs of 61% lower over the same period. We remain committed to maintaining a robust balance sheet. Our leverage target remains below 1x adjusted – net debt to adjusted EBITDA through the cycle. We are currently less than half of that. In our October, we raised a seven year bond of $750 million priced at a record low coupon of 3.375%. The proceeds have been used to repurchase the more expensive 2022 notes, further optimizing our finance costs. This translates into a $13 million interest saving annually.

Liquidity remains strong providing good flexibility. Our cash balance of $1.15 billion, excludes our $499 million share of the DRC cash balance. Our $1.4 billion multicurrency RCF facility was largely undrawn at year end and we funded the $365 million Corbis deal last month from cash on hand. Our credit ratings remain unchanged with investment grade ratings from Moody’s and Fitch with negative and stable outlooks respectively. S&P stays one notch below investment grade with a positive outlook.

We have a balanced capital allocation framework and continue to follow a disciplined and focused approach to value creation. Last year, we generated $1.4 billion of cash from operations and received $231 million of dividends from joint ventures. After tax payments and financing costs we invested about $717 million, which amounts to about 47% of our cash from operations in sustaining CapEx. And that was to fund all reserve development as well as waste stripping.

We self-funded our growth capital of $311 million, and that includes $122 million on Obuasi and $58 million at Geita for the new opening and underground developments. Our dividend policy remains 20% of free cash flow before growth capital, which we pay by annually. So in line with this policy, our Board approved a final dividend of $0.14 a share, and that was based on the free cash flow generated in the second half, which will be paid in March 2022.

Moving onto cash – addressing our cash lock-ups. So whilst our free cash flow continued to be impacted by lock-ups at Geita and Kibali and export duties at CVSA there were improvements on this front. In Tanzania, our net overdue VAT input credits refunds decreased during quarter four by $10 million to $142 million. And this was due to our ability to offset 35 VAT claims of $26 million against corporate tax payments. That took total VAT offsets against corporate taxes last year to $54 million.

We continued to engage with the Tanzania authorities regarding the mechanism to recover $123 million relating to historical VAT, which was accumulated since July of 2020. In DRC, our share of Kibali’s cash awaiting repatriation was $499 million at year end. This was lower than the $512 million balance at the end of Q3. This cash is held in U.S. dollar accounts and remains fully available for operational requirements.

Important to note is that we received $231 million from Kibali last year, which is 64% higher than what we received in 2020. To break it down, it comprises $150 million of shareholder loan repayments, and $81 million of dividends made up withholding taxes. This included $107 million received in December alone. Barrick our JV partner and Kibali’s operator remains fully engaged with the DRC authorities regarding cash repatriation and the 2018 Mining Code.

Also the DRC, our attributable share of recoverable VAT decreased by $1 million to $73 million at year end and in Argentina export duty receivable decreased by $4 million during Q4 to $19 million. During Q4, we received dividend of $19 million from CVSA in Argentina with the balance of awaiting approval from the Argentinean Central Bank. So in Argentina, we had a cash balance equivalent $239 million at the end of December. And this cash is invested locally and remains fully available for CVSA’s operational requirements.

Moving on the guidance for 2022. In line with past trends production this year is expected to be about 55% weighted to the second half. And unit costs are expected to decline into the second half of the year as production ticks up. So based on the planned production profile, we expect that unit cash costs and all-in sustaining costs will exceed the top level of the annual cost guidance ranges before trending below those ranges in the second half. And this takes into consideration, and once it ramp up to 4,000 tons per day in the second half, and it will add 140,000 ounces to this year’s production.

So just to sum up production, we’ve been guided between 2.55 million to 2.8 million ounces. In addition to the contribution from Obuasi, we’d be looking for marginal improvements in production at Tropicana, Sunrise Dam, Iduapriem and Siguiri, and consistent performances at the remaining assets.

So far this year production is tracking expectation except for Brazil, the exceptional rainfall has caused some disruption at our operations in minus to rise During January. Cash costs, the range there is expected to be $925 to $1,015 an ounce and this range does build an inflationary pressures on the back of oil, consumables and logistics, as well as skills. Inflationary pressure for the year is estimated at around 7% to 8% for the group. And we have benefited from delayed inflation impacts in 2021 due to our strategic partnerships on certain global spin categories, as well as the stocking approach, we followed at our operations. Still, we expect anticipate a sustained inflationary pressure through at least the first half of the year, which we will look to manage through our long range consumable contracts, leveraging our global spend and ongoing collaboration with our strategic suppliers. And as Alberto has mentioned, the operating model changes and the full asset potential program are expected to further mitigate inflationary pressures.

To sum up the all-in sustaining costs are expected to be between $1,295 and $1,425 an ounce, which is consistent with last year’s levels. We innovate, sustaining CapEx, underpinned our reinvestment strategy. So, we do continue our multiyear reinvestment strategy in exploration, Ore Reserve and underground infrastructure development, waste stripping, and then of course, we anticipate the Brazil tailing compliance capital as well as incremental – and incremental for $45 million of Ore Reserve and infrastructure development to support Obuasi’s ramp up.

So the total capital expenditure is different to last year, it’s weighted now to the first half and is guided at between $1.05 billion to $1.15 billion. And that comprises sustaining capital expenditure of $770 million to $840 million, which is almost three quarters of our total capital for the year. On a per unsold basis this amounts to $275 to $300 an ounce, which is in line with 2021. So these costs will remain elevated in the near term, but our plan to reduce to more normalized levels of around $200 to $250 an ounce from 2024 onwards.

Non-sustaining or growth capital, we guide at $280 million to $310 million and includes remaining funding for Obuasi Phase 3, the Havana stripping at Tropicana then we’ve got spend for the Geita Hill underground study costs for the two Colombian projects and then a new TSE at [indiscernible]. So the profiling of growth capital is weighted heavily to the first half of the year and that’s largely due to the stripping on relating to Tropicana.

When we look at expense exploration and study costs, that’s guided in line with previous levels and these an additional $42 million to move our Nevada projects forward. So we remain mindful that the further waves of COVID-19 and its impacts on communities and economies and the actions that authorities may take in response are largely unpredictable. And so our guidance before continues to exclude any impact on production and costs relating to COVID-19. And so thus far we are not seeing any significant impacts. Argentina was impacted earlier in the year, and is almost back to normalized underground capacity. Western Australia remains high risk and will certainly continue to monitor that.

I will now hand over Alberto Calderon to conclude.

Alberto Calderon

Thanks, Christine. You have our work order for us. People safe and well and supporting our communities is a priority. There’s no getting around the fact that 2021 was tough and under welding. But with the improvements recording in the second half couple with the implementation of the new operating model, we are well positioned to continue our recovery. We’re focused on improvement and delivering more consistent results in lines with the targets that we have set up.

Just to recap, and we’re seeing our firm on our ramp up target and continue to develop the project to ensure the ramp ups is as smooth as possible. A particular emphasis will place on improving, operating and capital efficiencies and we continue to look for appropriate capital savings along with the full asset potential review. Building on the successes of the last two years are world class exploration team are aiming for another year of more than replacing depletion while the technical team for Nevada.

As I have said before, we are committed to transparent reporting on the process making further decarbonize our business and how we are adapting to the business risk and opportunities presenting by a changing climates and efforts to counter that. The why, we finish, why AngloGold Ashanti, we have a high quality asset portfolio, a self-generated project pipeline, good people, and an excellent balance sheet. However, we’re now close to realizing our full potential. So how do we get there? We have to go back to basics. We have to get the business of mining, right? We will continue to strengthen our teams wherever necessary, ensuring we have the right people in the right roles at every level. The implementation of the operating model would ensure we’re optimally structured and organized to execute work in a way, which supports our values and our strategy. And we continue to entrench our leadership in ESG, particularly in the climate sphere where we’re more than half our emissions for a little more than in a decade.

So when I started at AGA, I recognized that we have very good assets, a very strong technical team of addition of gold mining started with AGA and a strong balance sheet. I believe now that the work we have done with the operating models with reinforcement of the Exco, with putting the right people in the right place, across all of our operations, and now with a full asset potential process, that we are clearly on our way back. To taking AGA back to its place among the top golden mining companies, which is where it belongs.

Thank you with that I open to questions.

Question-and-Answer Session

Operator

Thank you very much, sir. [Operator Instructions] Our first question is from Jared Hoover of RMB Morgan Stanley. Please go ahead.

Jared Hoover

Good afternoon Alberto and team. Thanks for call. Three questions from me, please. The first is around your full potential program and if Marcelo’s on the line, it might be could be better if he answered it possible. And I guess my question really is your commentary and your release alludes to him having lots of experience full asset potential programs. So, I wanted to get a feel from him, how difficult really is to close the gap between current performance of an asset versus what its full potential is. And obviously I know all the work hasn’t been done as yet, but maybe if you could give us a feel for what are some of the typical challenges you would have to try and close the gap to give us a sense for the size of the task here at AngloGold. Okay. I’ll follow up with my other two questions after this. Thanks.

Alberto Calderon

Okay. So I’ll ask Marcello to help us on this. I’ll probably before giving him, I’d reminding of what’s this rapper called Lamar Alexander, I think, or something like that. My kids like, but he has a song saying there’s really no success without a struggle. And so nothing is easy. It will, nothing is painless. It will be hard as I've said, in other places I like the Jack Wes sort of called only babies, like change. So change is difficult, but are very encouraged by just the preliminary. We've already been in a month on this and how the Sunrise people on the ground have embraced a team that is going to make these changes and they could have done two things. They could have said, no, we do things well. And what are you going to teach us? Or let's think outside the box and they have gone for the second one, so it's early days but I'm very confident that we have the right attitude in our teams to say, how can we think outside the box and how can we really take these assets to the full potential. So with that Marcelo, I think you have the experience.

Marcelo Godoy

Thank you, Alberto. Look great question. In general from my experience, it takes about three months to get to a point where we understand the opportunities. And those opportunities are always ranked by ease of implementation and value, after this three months we will go through a process that will take about from six months to 24 months to implement those initiatives. And for a single site, you can have from up from five to 15 opportunities that we may want to pursue at any given point in time. So it's basically very – this initial part of redefine diagnosing and designing the programs are critical.

And we really play the same playbook in all the sites that you go. One advantage of the process is that the learnings from outside can be rapid replicated into other sites, which obviously make us gain a lot of time. In terms of where the opportunities are, first mine planning and strategic investment. That's the strategy and mine plan optimization is a big lever that we have to generate opportunities where value is locked up in mine sites. I see that as one of the major levers that we have. Then we go into mining, mining equipment, mining strategies, processing, processing fixed equipment and methodological, recoveries, G&A utilities, infrastructure, and labor productivity.

Finally, external spend is one of the biggest buckets that we have as well, consumables, services and sustaining capital. So these five pillars, they are the five areas of full potential where we assign a specific project manager that will take the project through to completion and delivery of those values. So in terms of one of the key aspects and success factors of this process is really that it's site-lead – site-on, site-lead. And basically my team helps them the sites getting to the design phase where the opportunities are mapped and from there on, the site takes absolutely 100% over into delivery and tracking the results.

So we by the end of the year, we will have a much clearer idea of the size of the price here. So the teams are just starting. Now, we are starting Sunrise Dam, a couple of weeks ago and we started securing last Saturday. So the work is well underway and the teams are very excited about what lies in front of them, and really looking forward to see the value that we are going to deliver on these programs.

Jared Hoover

Great. Thanks very much. Yeah, thanks very much for that, quite comprehensive Alberto and Marcelo, I mean, that leads quite nicely, maybe into my second question, because you mentioned one of the levers there is external spend such as SIB CapEx. And I mean, if I look at this at CapEx levels, there is a higher for longer step up of about $300 an ounce to 2024. I guess I'm really trying to get some confidence around, are you – do you think that by the time we get to 2023 and 2024, is there a scenario where you could come back to us and say, the ore bodies are not exactly what you thought it was and now the spend is actually going to continue into 2025 and 2026. So that's really my SIB CapEx question. And then my last question on growth CapEx. At Obuasi, it looks like you're spending about $100 million in 2022. And my understanding was that Phase 3 was a total of about $85 million spend over about two years. So does that imply that you are pulling forward all the project CapEx and that you could actually hit that 400,000 to 450,000 ounce per and production level quicker than what's being guided? I'll leave it there. Thank you.

Marcelo Godoy

Okay. Look, the – if you look at it in millions of dollars, we spent $500 million in sustaining CapEx in 2019 and 2020, and then we are jumping to $800 million. In hindsight, and that's always easy. We probably should have spent a bit more. So we are in catch-up mode in several of those assets. Now we do have an idea. It's just that we want greater confidence, but we do have a good idea of what's happening with that investment in the next five years. I can't say that. So currently we are – what we see is that we can't keep that $300 per ounce level, which is high – sustaining CapEx for the next three years, let's say.

And then we should go back to about $220 an ounce. Now that implies a certain profile of reserves added, the resources added, et cetera. If in the full potential, there is room to spend more, but with probably a much more greater upside that we have identified, so be it. We don't think so. I don't think that we will go much higher than that. I think $300 an ounce is a lot of money. And I would think that we are along that, but there's no – in the end, this is about what can add the greatest value. And so if at the end we say, we have to be $350. We will tell you, and this is because these ounces is going to go into whatever 20% higher production or something like that.

So that's how I would see it. And I have confidence that we know already that the Brazilian, for example, which is so much money that is painful is a temporary thing. And we also know that there is catch-ups in Obuasi, as you said, and it was in Geita. And so what we know and what we don't know, we know, but in the areas that we suspect, I think that would take us to that to $220. If we go to the unknown, unknown, I can't tell you, but in the known unknowns, we should be fine.

So Obuasi and the yes – there's another big investment, but that investment as we outlined in the presentation is for the shaft, it's for taking the plant to 5,000 tonnes per day. And it is a necessary step at the end of 2023, to be able to ramp up from about, let's say analyze $300 to $350, to around $400 to $450.

And so I don’t think that we will be able to – at this stage, I would be surprised that we do anything quicker, but the more important thing is that we already for 2023 then have a very sizeable production coming from Obuasi. And then we are prepared in 2024 with that jump with greater production and very competitive all in sustaining costs. Christine?

Christine Ramon

Yes, just on the growth CapEx that Jared referred to for Obuasi. So the [indiscernible]. And then at the balance of, so it is about a $100 million that’s budgeted in total for 2022. And these about $90 million for Phase 3 included in that $100 million.

Alberto Calderon

Well, that’s the Phase 3.

Jared Hoover

Very clear. Thanks very much.

Alberto Calderon

Thanks, Jared.

Operator

Thank you. The next question is from Dominic OKane of JPMorgan. Please go ahead.

Dominic OKane

Hello, Alberto. Just two questions from me on Kibali and the DRC. It does appear that there’s lights at the end of the tunnel in terms of the cash repatriations. And I note that Mr. Bristow on the Barrick Q4 results last week indicated that there was going to be a $300 million dispersal later this month. So I wonder if you could just maybe comment if that is also your expectations and given the very low level of leverage with the balance sheet, can you maybe give us some indication about how you’re thinking about cash proceeds? Is it possible to think about share buyback?

Second question is regarding Nevada, could you maybe just give us some insights into permitting requirements for your Nevada properties and I’m thinking specifically environmental and land access permitting requirements? Thank you.

Alberto Calderon

Thank you. So let me go in reverse order. And then at the end, I’ll ask Christine to help me. So from the permitting the Nevada is probably one of the best jurisdictions that you can be in. There in the states and it depends and the lock of the draw, basically two permit in agencies, you can be in the department of an interior and that’s cool reveal something land bureau. And then you could also be in the department of agriculture and that’s the forestry.

And that we have the ministry of the interior that has a very good track record of expeditious and very, let’s say, pro business. And let me say it in a pro business means still highest environmental standards, protection of water, everything. It just means that they allow business to get the environmental license in good time. And that is why we have put out there that in three years we can be in production, probably in any other jurisdiction, we would be talking about five years. So that is on Nevada.

On the second one, cash flows look, if you, as we look into the future, we still are on a very capital intensive phase. And we’re also funding everything with our own cash flows. And we are committing to a policy that is working that is new that is the 20% of the cash flows to dividends. As I look into the next years, I don’t see any reason to change that. I’m happy with a strong balance sheet. I’m happy with self funding and let’s put us an example if we, whatever money we get from Kibali if this realizes for example, the 300, you could earmark 20% for shareholders as cash. That's it with that commit.

So on Kibali, we are – I would say I’m most happy about what happened in December and the past months, but basically in December, we had this $100 million, $107 million, and it shows that the mechanism works and it does give a credibility that the money that we have there, and we have left a net $499 million that money let’s say is safe in our own control in U.S. dollars earning interest, and that we tested a mechanism that worked, but for more details, I’ll ask Christine to help.

Christine Ramon

Thanks, Alberto. So I think as Alberto sees, we’ve seen good momentum. Barrick has confirmed that the necessary paperwork is in place to affect the cash repatriation. And I think your specific question was relating to the tranche of $300 million. And I think we’ve heard from Barrick as well that the process has started to remit the funds. I think, we only recognize that once the funds are received in our AngloGold bank account, because the funds get remitted from Kibali JV in country to Kibali, Jersey and from the dividend is declared through to the respect of shareholders. So I think we’ll be able to confirm that once the funds are received, but as Alberto sees these really positive momentum. And…

Dominic OKane

So could I just ask you, maybe there’s a follow up? Could I just maybe ask the follow-up question? Alberto, given net debt EBITDA is a 0.4 times, do you not regard AngloGold to be in a position of excess capital or specifically when does AngloGold move to a position of excess capital?

Alberto Calderon

No. And this is the reason why I – you learn from investors as you go around the world, and I remember talking to that to one investor and probably another, I don’t know if it is this one and another company. But said yes, if you had perfect certainty on the price of gold, well, then you would say, well, yes, what we could do X or Y, but you don’t. And what looks like a very, very even lazy balance sheet, if gold goes to 1,600 becomes different.

So look at this stage, I like strong balance sheets. I like low debt. When you have a single commodity, like we do, it’s just much better to be like that. I think that there’s really too much risk, more than people ordinarily see for changing that. And so from the first moment, I said, I’m grateful for the strong balance sheet. I’m grateful for that low net debt. And if anything, we want a better debt profile, which have happened with the $700 million. And I really don’t intend to change that strategy at this stage. Maybe in one or two years, if these asset potentials and all of that – those continues to go well, and the gold price is high. Then we can talk again, but not at this stage.

Operator

Thank you very much. The next question is from Adrian Hammond of SPG Securities. Please go ahead.

Adrian Hammond

Hi, Alberto, and yes, congrats on another – three quarter. Yes, I just want to – I have two questions for you and one for Christine, one for Stewart. Just curiously your comments around your view of the global peers. I mean, how do you view your – how do you view AngloGold relative to Obuasi and where would you like to be?

And the second question, and I appreciate you, you are going through this asset review process, is there a scenario that's – that assets that don't make the cut that you would sell them? And it's possible that AngloGold would be as smaller company?

And then for Christine, is there – could you just, it's up until now could bodies we've been modeling in 40% repatriation effectively, what should we be penciling going forward? And should those moneys that are sitting in cash in the lock-up would that be subject to dividends?

And then for Stewart, I mean, appreciate ESG's, starting to only take real effect now in the business in terms of cost, but is there a – is there a cost per ounce that we could attribute ESG for the group? Thanks.

Alberto Calderon

Okay. So let me start with AngloGold and Obuasi. Look, what you see with Obuasi with the latest results is that something in cash costs with about $800 on something and something on all in sustaining costs of about $1,100 what would be a solid company. Now there's differences on if you have a magnificent resource and then you have a byproducts and all of that, it could be at $700 or lower. But I think with the type of resources that we have and all of that and something as I said with an $800 and $1,100 and all in sustaining would be – would be that sort of allow us to join back in sort of what I would consider a well run and competitive top tier mining – gold mining company. For the full asset potential look, I'll probably start by saying that there's no point of being an asset hugger or of saying that we need to be the third largest or whatever. I'm probably more wedded again to the Jack well; you always have to understand if your assets are worth more inside and outside of AngloGold.

Now, my assessment after being some months here is that all or maybe almost all of our assets are worth more inside AGA than outside, that's my assessment today. There may be some marginal assets and then some marginal projects that when we do more work we may change sort of opinion. But that would be more the exception than the rule. I think with the full asset potential, you could understand that the insights that we would have, it would make again versus the valuation in the market much better that they remain inside AGA. So that I'm pretty confident that that will be the base, if not follow or most in terms of ounce or the overwhelming majority of our production ounces.

In terms of ESG, I will let Stewart know, I don't think we have any [indiscernible] answers. What I will tell you is we are in the process in the next months of assessing our targets for 2030. We have put out our targets for 2050, and we will now put out when we finish that work sometime this year, we will put out a pretty comprehensive commitment of our EOG net reductions for 2030 as a credibility step change towards the commitment of reaching 2050 or before, or net zero.

Adrian Hammond

Thanks, Alberto.

Stewart Bailey

Adrian, I'll keep it reasonably brief. I think there are some clear things, some clear outgoings that you can see on ESG with respect to community investment and whatnot. But I think the bigger, more philosophical question is that there's a cost of not doing your ESG properly, which far outweighs whatever it is that we spend by multiples. And I think so really what you want to do is make sure that you are reducing your environmental footprint, and there's clear benefits to that that you're paying salaries, tax, royalties so that you're a good tenant because we after all have to keep our landlords happy. And I think, and making sure that your governance is top notch, because if you don't do that you end up in a very difficult spot. So I think we don't see ESG as a cost at all in the business and for us it really is about doing it right, maintaining our social license to operate and ultimately that's begets business success in many other ways.

Christine Ramon

Okay. And as relates to your question on Kibali, I think certainly when we talked – when we spoke about the 40% that came through lone repatriation that was because of the changes in the mining code. So I think what you can expect is, well, the cash flows expected from Kibali this year. A continued sort of 40% repatriation coming through in respect of loans and the balance to come through in the form of dividend payments that will come through from the DRC. So we certainly expecting all of the cash flows from Kibali to come through this year. Of course, from a timing perspective they normally come through one quarter in a year. So I think if you can – you can factor that into your model and then as relates to the cash that is locked up at the end of December the $499 million, which is our share. You asked what can we expect in terms of dividends. I think, that goes into free cash flow when we receive it and it'll come through in the dividend formula, which is 20% of free cash flow pre-growth capital.

Adrian Hammond

Great. Thanks everyone.

Alberto Calderon

Thanks Adrian.

Operator

Thank you. The next question is from Patrick Mann of Bank of America. Please go ahead.

Patrick Mann

I've got a follow-up just on the Kibali cash flow and how it works. So the dividend portion that comes through and then there's a kind of capital portion, which is relates to debt, which I suppose is what the Kibali JV owes the shareholders for bolding the mine. I mean for how long can that cash be repat or, or what is the balance of that debt that the JV owes the shareholders? So for example, how long can you take 100% of the cash out of the DRC? And then I suppose at some point then it reverts and then is it – is it go back to 40% of free cash flow after the debt is repaid? Thanks.

Christine Ramon

Yes. So the shareholders loan, our attributable share of it is $1.2 billion, and Barrick has got Obuasi and that earns interest at 8% per annum, okay. So that is the shareholder loan amount. And so clearly when I spoke about the 40% coming through this loan repatriation, as the loan repatriation comes through, it gets all set against the shareholders loan. And so it's still at least another three or four years before that loan gets repeated or repaid as one would put it. And I think then I see the balance, of the cash would then come through in the form of dividends, which is subject to withholding taxes of 10%.

Patrick Mann

Thanks. And then long term, right? So post the shareholder loan being repaid. What amount are you allowed to dividend out of the country?

Christine Ramon

Okay. So long term, I think just being in mind that when the mining code changed in 2018, it did allow for companies operating in the remote region of the DRC to apply for an exemption, which is what the Kibali JV has done. And so long term, that application now has really been made. And so long term we expect for the cash to flow through freely. So it would not then be subject to the 40% limitation.

Patrick Mann

Okay. Thank you very much.

Alberto Calderon

Thanks, Patrick.

Operator

Thank you. The last question is from Leroy Mnguni of HSBC. Please go ahead.

Leroy Mnguni

Hi, good afternoon guys. Thanks for the opportunity. My questions are around Obuasi, if I see you've had a marginal decline in reserves. Is it correct of me to assume that that comes out of Block 8? And then just looking at the diagram on Slide 12, I think it is that KMS and KMV shaft. You seem to require sooner than, than what I recall in terms of the timeline. Has anything shifted there in terms of the long term plan or the two related? So have you brought that forward because of what happened, at Block 8 last year?

And then my final question is just, your production guidance range seems quite wide. Could you maybe give us a bit of color on which are the operations that, that you're a little uncertain on in terms of production in 2022, please?

Alberto Calderon

Okay, thank you. So the first is no, the 400,000 ounces are not in Block 8. We have said before that we didn't lose anything and that is the case. What happened is our mine planning guys are always re-optimizing at different prices. We still have a very low $1,200 price for resource, and there was some far away blocks that were way into the future. And the, I think by marginally, but the assessment being conservative was okay. There's about 400,000 ounces that, we are taking off from the resource. But if you look at the quality probably of the reserves that have been outline and all of that, that nothing of that has really changed. And so regarding the, I would say that nothing has changed on the shaft.

I did say last year, I said when we put out for the first time in November, the Obuasi guidance, we did say that we would be in 5,000 tons per day at the end of 2023. And that has been to do that we need to spend that $90 million of capital, growth capital in Obuasi. So this is just a reaffirmation of what we said, then there's really no changes there. If you go to production guidance for the company, so if you remember where we, we landed last year was 2472. Our midpoint guidance is 200,000 ounces higher than last year. Of that, if everything goes perfect, and this is the problem for guidance as in Obuasi, we would be adding 140,000 ounces in to the company. And then Boston Shaker is doing much well, much better. Boston Shaker is normal. So we should, that probably has less risk.

And so we should be adding on Tropicana, another 30,000 ounces. And then on the rest of the company, we would add some X number of 1,000 ounces. Now on the flip side, you have Brazil started the year with torrential rains that you have seen. We started COVID at some point in Argentina, we had 75% of the workforce in quarantine. That is, we only had 25% of the workforce working. And then if you look at the production in for the month of January versus our budget in CDS, it would've been about 20%. So the impact of the torrential rains plus COVID was really devastating. What I'm telling you is there's always, it's easy putting out of guidance if everything is perfect, but 20 years in mining tells me that the probability of surprises is much higher than the probability of having significant increases.

And so that's where there's a judgment call. We are cognizant of the fact that rebuilding credibility is low and losing credibility is swift and fast and so we wanted to make sure, that in the scope of risks, and again if you go back to Obuasi. Yes, we, if everything goes fine, we increase by 140,000 ounces. It's perfectly feasible that we have a two month delay in something with the pace flatten. And then you up to 200, in the long term of the company, that’s not an issue, but for the guidance it is. So I've been asked a lot of time. Are you being excessively conservative? I don't think we have, I think 200,000 ounces is a good midpoint estimate, but the ranges and by the way, it's a normal range. If you look to other companies like Barrick, they have a, roughly the same 10% range.

It just caters. If everything goes, as we plan it right now, we should be above that midpoint. But as I said, things don't happen that way. So I'm comfortable with the guidance. I'm comfortable with the low guidance, because that should we, when we discuss this. And believe me, we discuss this along and hard with the team, with the operators, with the finance team, it's like, okay, what can you ensure us that you have a very, very high probability and that's like, then you say, okay, everything goes wrong. And that's the low end of the guidance. And then everything goes right. And it's the high end of the guidance and the world usually converges to the midpoint.

Leroy Mnguni

That's very clear. Thanks, Alberto.

Alberto Calderon

Thanks, Leroy.

Operator

Thank you very much. Ladies and gentlemen, we have no further questions and I'd like to hand back to Alberto for some closing comments.

Alberto Calderon

Thank you very much for your questions. Always, Yes. I always find this process as instructive because you see things from a different angle. So thank you for your questions. Thank you for your patience. So I think, I would hope that the next results we go a bit shorter. As you never think these things are going to be so long. But again, it was you always want to be as comprehensive as possible. So thank you again for your patience, for your questions. And as always, I'll see you soon again. Everyone, thank you.