Firstly, I'd like to extend my thanks on behalf of the board and the team here at WAF to the site team, who continue to do an excellent job, and also to our international fly-in fly-out expats and their families, who are continuing to put up with the situation, certainly here in Australia, but also around the world, where a number of them have to sit through hotel quarantine when returning to their country of origin. Quickly moving on to health and safety. We've had another good quarter with 7 million hours works, LTI free. That's about 26 months LTI free on the project now. We've maintained continuous milling and mining operations during Q2. We're managing with the COVID pandemic on-site and in our supply chains and with international travel.
We're seeing significant disruptions with particularly our Australian fly-in fly-out workers, with limited seats returning back to Australia and often people being bumped from Perth to Sydney or Melbourne or Brisbane. We're dealing with that for the time being and hopefully with the phase IV rollout announcement recently, that fully vaccinated travelers will be able to quarantine at home in the near future. We're kind of watching that very closely and hopefully that actually takes place. With regards to production, the ramp-up continued in Q2, with ounces up 14% to just under 64,000 ounces. Cost decreased from US $957 an ounce to $928 an ounce. We averaged just over AUD 1,800 an ounce in unhedged gold sales.
We're currently tracking well against our annual production plan, we remain on track to meet our production guidance of 250,000 to 280,000 ounces at $720-$800 per ounce, all sustaining costs. In the underground, mined ounces are up significantly on Q1. They're up 116%. Ore tonnes increased by 66%. Ore grades are up as well, at 10 grams versus about 7 grams in the previous quarter. We've now moved into the production cycle of continuous stoping, and we'll be in that phase for the remainder of 2021. During the quarter, 855 meters of development was completed underground versus about 800 meters in the previous quarter. At the end of the quarter, the decline was about 340 meters below surface.
It's some really good work going on there. We've also finished developing panel 2, which is obviously beneath panel 1, and that's going to enable more continuous production from two underground ore panels. On the open pit, they were steady. Tonnes were down slightly on the previous quarter, and grade as well, as we've been feeding in some lower-grade oxide material as the blends got a bit harder with increased hard material coming from the underground. Processing, another good quarter from the processing team with ounces produced up 14% from about 74,000 ounces. Blended head grades come up to about 2.9 or just under 3 grams, which is up significantly from the previous quarter of 2.3 grams. We're seeing that quarter- on- quarter since last year with the increased proportion of high grade from the underground.
Recovery is also steady at 94% with mill throughput in line with the previous quarter. On capital, we got a number of significant projects finished during Q2. We lifted the water storage dam, which was completed before the wet season. Lifted and mined that, increased capacity by 50%, and that really de-risks the future of process water supply for the project. We've largely completed the aggregate crusher and cement batching plant for the backfill on the underground. We took advantage of having a lot of extra gear on-site and accelerated the tailings storage facility. That work's largely finished now as well. We're kind of expecting to have lower standing capital over the next two quarters. In financial and corporate, we finished the quarter with AUD 61 million cash on hand.
We generated AUD 62 million from operating activities, we held about AUD 24 million Australian dollars in unspent budget at the end of the quarter. We made some significant payments during the quarter. Obviously, we paid AUD 51 million in debt to Taurus. We paid AUD 19 million in Burkina Faso 2020 income tax and also made a $2 million distribution to the government as part of the profit and the government being a 10% owner of our in-country operating company, SOMISA. Over the sort of the quarter, notional net debt decreased by AUD 19 million to AUD 57 million. We're making very good progress in getting that debt down. We also completed some good work in the local communities as part of our environmental and social investment.
We saw several milestones achieved across this area, including improving our waste management on-site. Starting work with some of the communities regarding fodder production for their cattle and for their animals that they're grazing in the local area. We've completed a greenhouse gas program, which allows us to align ourselves with Equator Principles, so we know exactly how much greenhouse gas emissions we're producing. We also finished off work on one of three schools that we built in the area. We provided a solar power program or solar power installation on another five schools. A lot of good work regarding local restoration, soil improvement programs, training programs for local women and also for some of the former illegal artisanal miners in the region who have been receiving trade training programs and tools. We can actually employ them and give them some new opportunities.
Just on growth, we've been working hard on the Toega feasibility study during the quarter. We had almost finished the resource definition infill drilling program at the end of June. We look forward to releasing some of those results over the coming weeks. We're also on track with our environmental and social studies and permitting for Toega. For both the Toega mine area and for the haul road back to Sanbrado, we expect to submit those studies to the government in Q4 this year. We're in the middle of wet season, we've halted work on other exploration projects. We will report results from the work that's been completed in the coming months when we get results in from the auger drilling programs. Just moving on to what we're focused on for this quarter.
Obviously delivering our mine plan and continuing to increase gold production further than 64,000 ounces last quarter, and also reduce our costs further, and continue on with the Toega feasibility study. Just on that, I'll just turn it over to Simon again to see if we've got any questions.
Thanks, Richard. Just a reminder, if you did want to ask a question, please do so via the Q&A button at the bottom of the screen. The first question is from Roger Fitzpatrick at Charlton Asset Management. Richard, can you please provide some detail on how the underground ramp up is progressing?
Okay. Thank you, Roger. Well, we've moved into a back-to-back stoping cycle now, which is where we've been wanting to get to for the last kind of 18 months. We've now got I think seven levels developed and two main areas of stoping ore production, which is going to give us continuous stoping ore feed for the rest of this year. We set ourselves a target of hitting an average of 1,000 tonnes a day from our underground, and the last six weeks we've been exceeding that, and that looks like it's going to continue for the rest of the year. We're very pleased that we're finally into this more continuous stoping phase, and we should see the benefit of continued grade improvement over the back half of the year.
Great. Thanks, Richard. Next question. How much does sustaining capital costs make up of the total costs, and will this continue?
Look, I'll pass this one to Padraig O'Donoghue, our CFO, who's also here with me.
The sustaining capital makes up about $76 per ounce of the all-in sustaining cost. It's going to continue at lower levels than that. We're thinking about $40 or so or less per US dollars per ounce going forward.
Great, thank you. Next question is, how is Sanbrado's performance reconciled to the resource and reserve modeling, and have there been any significant variances to date since the start of production?
We're tracking very closely to reserves. While we have had some production from outside reserves, but early on when we first ramped up in the first six to eight weeks, we would have a negative reconciliation, but that was generally due to near-surface artisanal activity, and some of the block densities that we'd included in the resource work. After the first sort of six or eight weeks it's corrected itself and we've tracked up, we've tracked slightly down, but on average we're tracking very closely to our reserves.
Great, thanks, Richard. Next question is regarding the company's debt. Is it likely to be repaid in 2021?
Padraig, I'll pass this one back to you.
Our current modeling goal is to repay it in Q1 of 2022. I guess if gold prices really did well and production came ahead, then we would look at opportunities to pay it down early because we just want to get the interest put away and open up our optionality on our cash going forward.
Great, thanks. Can you please comment on the security situation within Burkina?
Right. Well, the situation in Burkina has not improved in the last four or five years. There is a significant humanitarian crisis in Burkina. I think 1.5 million people have been displaced from southern Mali, northern Burkina Faso, and also from Niger. This is something that the Burkina government is dealing with, and with their limited resources. I think since 2015, about 1,500 people have also been killed on the border with Mali and Niger. We continue to see unrest in that region and much of it is really due to the eastern two-thirds of Mali being ungoverned. It's a place where some Islamic insurgents are operating. It's very unfortunate and it's something we're watching very closely. Coming into sort of the central part of Burkina where we're located, we don't see a lot of local issues regarding the security.
We are the biggest employer in our area, and we've got very strong links with local groups and the local security forces in the army and the police. It's something we're monitoring. We obviously take precautions when we're moving our people around. Right now for the foreseeable future, we believe we can operate safely in the country and also do our part to help improve the situation by being a large royalty and sort of royalty payer and taxpayer to the Burkina government.
Great. Thanks, Richard. Just on Toega, feasibility, timing, is it still late calendar year 2022? Any additional met test work required?
Right. Part of the drilling program that we've completed, the first thing we did was we completed a number of metallurgical holes and geotechnical holes. Both those selected core samples are back in Perth being tested at the moment. As I mentioned, just in the description before the Q&A, we have completed most of the drilling for the resource work. There's only sort of three or four holes to go. We have made really good progress with wet season sampling. We've started all the aquatic sampling for permitting. Also prior to that, we've been doing dry season sampling as well. That part of the feasibility study is lined up to be finished by Q4 and submitted to the government. That's all part of the permitting process. We would expect to get fully permitted towards the back end of 2022, which kind of lines up well with our original timeline.
All right. Thanks, Richard. Can you please give an update on the progress of accessing the high-grade ore in the M1 South open pit?
We're accessing it. That's the update really. The pits have gone well. Once we got down through the artisanal zones, which was pretty extensive at M1 South, part of the increase in grade that we're seeing, we've gone from 2.3 to 2.9 grams per tonne, in the last quarter. Part of that increase is coming from M1 South open pit as well as the underground.
Perfect. Thanks. Are dividends being considered post repayment of the Taurus debt?
Look, we're going to look at our capital management program later this year and we'll take some advice on that. We'll look at a range of options. Certainly, paying dividends or buying back shares will be on the table. We need to pay Taurus back before we can implement those programs. That's our focus right now is to pay back the debt as quickly as possible.
Great. Thanks, Richard. That concludes the Q&A segment. I might just hand it back to you for closing remarks.
Thanks, Simon. Look, thanks again. It was another good quarter of increased production and decreased costs, and we expect that to continue for the rest of the year, and while we remain on track to meet our guidance. Thank you.
Great. Thanks, Richard, and thanks all for joining.