Good day, ladies and gentlemen, and welcome to Gold Fields' operating update for the September 2020 quarter conference call. All participants will be in listen only mode. Please hold the opportunity to ask questions will be prompted. For the benefit of other participants who have joined via the HP web phone, please ensure that you unmute your microphone permission to make yourself audible before asking the question queue. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please note that this conference is being recorded. I'd now to hand the conference over to Mr. Nick Holland. Please go ahead, sir.
Thank you very much, good afternoon, everybody, or good morning, depending on where you are in the world today. I'm joined by Paul Schmidt, our Chief Financial Officer, and also Avishkar Nagaser, our Executive Head of Investor Relations. Some of you might have seen we put out our Q3 abridged results this morning. As you know, during the intervening quarters between the half year and the year-end, we give abridged operating information. We don't give full financial information. Of course, we'll provide full financials again when we give the year-end results in February. I'd like to start by just describing briefly what we've done on COVID. I think if you look at the book, you'll see that over the year, we've done over 40,000 tests.
Now, that's the PCR diagnostic tests, which are the definitive test that you do to detect the presence or otherwise of the virus. I'm pleased to say that as we sit today, we only have around 20 odd active cases, which in the scheme of things, is pretty low. Unfortunately, three people did pass away during the course of the year from the virus, which obviously is extremely sad. That said, though, the good news is, I think we seem to be over the worst of the impact of the pandemic. We're still testing our people. The two operations that were really hardest hit from our side were South Deep and Cerro Corona. Both of those mines were shut for extended periods and then operated for extended periods at probably around about half capacity.
I'm pleased to say that as we sit now, South Deep is back to over 95% of the total workforce, and we're at very similar stats in Peru. Peru is just over 90%. To all intents and purposes, we have everybody back to work that we need back to work. As I've mentioned in the half-yearly results, the impact of the pandemic over the year was estimated to be about 3% of production, and essentially all of that's come from South Deep and from Cerro Corona. We've not adjusted the production numbers again, as you've seen. We're reaffirming our guidance that we gave at the half year, between 2 million and 2.2 million-2.25 million ounces of production and at the same cost that we gave you before. Let me just make sure those numbers are right. 2.2 million-2.25 million ounces.
We're saying our costs are between $1,070-$1,090. That's all-in 3costs. We're reaffirming the guidance we gave you at the half year. As we sit, we're looking good to achieve those numbers. I think the impact at South Deep has not been that severe in the sense that it's not that we've missed out on a whole lot of activities we should have done. If you look at the production results for Q3 , we've got up to about 65,000 ounces, which is very close to what we were expected to do anyway, even before the COVID situation. That's meant that our costs have come down quite a lot and South Deep is making some good cash for the group. South Deep, I think, is in a really good position to achieve the revised guidance for the year.
That doesn't look like a major risk at this point in time. We're well set up for 2021. A different situation at Cerro Corona, though, because we couldn't do a lot of waste stripping that we were going to do this year. Remember, we're into a strategy of accelerating the mining over a period of about five, six years so that we can actually create additional tailings storage capacity in the pit. We have to mine out the pit a bit quicker and stockpile some of the ore and then feed that ore over another five to six years, once we've shut the mining. We've had to accelerate our stripping in terms of that plan. Of course, with the COVID situation coming to the fore, we've not been able to do a lot of that stripping.
That will mean that it's gonna be pushed into 2021 and 2022. It'll take us probably about two years to catch up that stripping. We've mobilized some additional fleet, we've mobilized some additional people so we can catch up that stripping. The other effect of the shutdown at Cerro Corona because of COVID is that we've not been able to feed the highest grade ore possible to the plant. Because we haven't stripped, we haven't exposed some of the ore, we've had to feed ore that was available, and we've not been able to get the highest grade ore into the plant. That's really why the production is down at Cerro Corona. We've been able to fill the process plant, but we've not been able to fill it with the best ore possible. This will come in time.
The integrity of the long-term plan is still intact, but it'll just mean that there'll be some additional stripping next year and the year after. Of course, that's going to mean a question going through your minds at the moment. That'll mean that our costs will be higher than what they would otherwise have been, because some of that stripping that was going to be done this year hasn't been done. It's got to move out. Some of the higher grades that we would have processed will be deferred. We'll probably see an impact on costs over the next year or two, probably to levels similar to what we're seeing at the moment. Broadly, that's the situation on COVID. Is there going to be a second wave or is there going to be further issues in the countries we're in? It's impossible to know.
We are not going to drop our guard. We're going to continue with our vigilance, social distancing. Where people can work remotely, we're encouraging people to do exactly that. Obviously, we'll continue testing. We'll continue making sure people are aware of the dangers. We'll just have to see where we are. If we have to pull back production because of a second wave in certain areas, we'll have to just give consideration to that. Hopefully not, and the fact that we're testing people means we should identify issues pretty quickly and be able to address those concerns, isolate those people, quarantine the affected people, and make sure we protect the rest of the workforce. Incredibly, we've had no infections at all in our mines in Western Australia, and although we've had infections in Ghana, the recovery rate in Ghana is particularly high.
We're up to about 99% recovery rate. It looks like people are able to be quite resilient to all of that. Just moving on to the overall production results for the quarter. Pretty much in line with what we would have expected. 557,000 ounces attributable. All-in costs of $1,070 per ounce. That includes, obviously, the expenditure on the Salares Norte project. Not to be confused with all-in sustaining costs. Many of the producers, unfortunately, don't give full disclosure of their costs. We are one of the few companies that give you everything. We give you the full all-in costs, we give you all-in sustaining costs as per the World Gold Council definition. We give you the full number so you know exactly what you're looking at. That includes all capital, all exploration, including Salares Norte.
I think it's probably worth starting at Salares Norte first. Normally, we talk about that at the end. Let's talk about it first. The project is proceeding extremely well. The COVID situation hasn't slowed us down at all. We've been able to do a lot of the engineering work remotely. The contractor that will be doing the mining has now been mobilized, and they're preparing the area for the mining, which is what we call the pioneering work, access roads, areas where they can dump waste, areas where they can dump the ore. Getting ready for the pre-strip that will start in earnest in around about six weeks' time. We're getting very close to that. At the same time, the bulk earthworks contractor has been mobilized to prepare the site for the process plant and for all of the ancillary buildings that will go with that as well.
They're mobilized, and they're starting to prepare certain of the areas where we'll do some of the early works, in particular the crushers and parts of the front end of the plant as well. They're getting that area ready first because that will be the first part of the process plant construction. We've also lodged around about 78% of the procurement orders for the total project. What does that really mean? It means that we've priced about 78% of the project, excluding contingency. We've got firm prices for that. The only thing that would impact us going forward then is escalation between now and finishing the project in about 24 months. A lot of that is subject to the local Chilean inflation index, which is a very mechanical formula.
If you look at the last three or four years, the average inflation in Chile has been somewhere around about 2%- 2.5%. The other key piece of work that is almost finished is the diversion channels around the footprints of the operation, obviously to isolate it from climatic conditions, water control, et cetera. That's proceeding well. At this stage, I think we're really in a good space on Salares Norte, and we know that next year is going to be a big year for us, where probably around about 60% of the total capital on this project will be spent as we get into the pre-strip in earnest and as we get into the process plant construction as well. Moving then to the operations very briefly.
South Deep, as you've seen, has had a tremendous recovery in Q3 as we got our people back, and we showed very good results, up to 65,000 ounces. Cost just over $1,000 per ounce, all-in cost. As you can see, that's an operation now that's looking really competitive in our group. If we look at Ghana, I think what's noticeable about the Ghana region is that Damang is now getting into the really good stuff in the ore body, as we said we would in Q3 . We've seen production get up to over 60,000 ounces. We've seen our costs get down to just over $700 per ounce. In fact, in this quarter, Damang is now the lowest cost operation in the group.
I think we are starting to reap the benefits of the significant inward investment in sort of pushback that was started around about two and a half years ago. Tarkwa continues to be very steady, so no particular concerns. That's really a function of a very consistent ore body in terms of ore thickness and grade that we're lucky enough to have in our group. Asanko has, I think, had a more difficult quarter in the sense that it's had to do a lot of stripping ahead of what it would ordinarily have had to do with the premature closure of the Nkran pit, with the wall failure that was announced late last year.
As they try to recover ounces elsewhere, they've had to do quite a lot of pre-strip in some of the satellite pits and in Esaase in particular, to try and make up some of those ounces. Pleasing to see that you would have seen that Galiano put out their results indicated they're still expecting to be within a range of 225,000 to 250,000 ounces for the year. Hopefully we'll see a good recovery in quarter four. The costs, by and large, are a direct reflection of the extra strip they've had to put in place. Plus, we've cranked up the exploration activities on the lease as we look for new ore bodies to sustain production into the future.
In terms of Australia, I think overall, a good performance to produce 250,000 ounces in the quarter is indicative of a million-ounce region, which is what we've talked about. Obviously, there's a few pluses and minuses in that. Gruyere have had some issues with the process plant. We had a ball mill failure that cost us a week of processing time. Difficult to really understand exactly what happened there, but we are doing a survey and investigation into that just to make sure that our maintenance practices are up to speed. We're starting to move more tons in the later stages of our pit so that we can secure the plans for 2021 and beyond. There's been a bigger focus on waste stripping there than there has been on ore as we set the miner for the future.
As we sit today, we're not seeing anything here that would indicate that the feasibility study is impaired in any way. The grade is very close to what we thought it would be. The costs, I think, are just a reflection of the fact that the ounce production is a little bit less with less processing this quarter. I think we're going to be well set up for 2021 and beyond. Looking at Cerro Corona, I think I'll summarize that under the COVID discussion. It's a direct function of the lack of access to high-grade ore and the fact that we couldn't do the stripping in accordance with the original plan. That will be a 24-month catch-up between 2021 and 2022. Pleasing to see that their costs, even with all of those issues, are still pretty competitive compared to the rest of the group.
I think that's pretty much all I would say at this stage. I mean, the balance sheets we've summarized for you looks in pretty good shape. Subsequent to quarter end, we retired the 2010 bond. That's gone and we were able to pay that off from a combination of cash resources and other facilities. I think as you all know, we knew that was coming and we put two new bonds in place, a five-year bond and a 10-year bond last year. Essentially, our debt profile is looking very, very good. Credit must go to Paul and his team for the great work they've done there. I think with that's as much as I'm going to give in terms of an introduction. I'll turn it back to questions which either myself, Paul or Avishkar will field. Thank you very much.
Thank you, Stuart. Ladies and gentlemen, The first question comes from Shilan Modi of UBS.
Good afternoon, team, thanks for hosting the call. I think you did quite well post the lockdowns in various jurisdictions and good work to the team for ramping up operations. Couple of questions from my side. Firstly, according to my calculations, you've built about 20,000 ounces of inventory. Is there any reason for that? When will you release it? Recently, especially the last two weeks, producer currency FX has improved quite substantially. Have you factored that into your guidance in terms of costs? The third question for now, some of the other Australian gold miners are talking about reducing their cutoff grades, i.e., they're going to be mining much lower grade material in the next year or two. What's the outlook for your operations, and are you similar or different? Thanks.
Okay. I think the inventory issue is a function of a couple of things. Sometimes it's blend. For example, if you look at St Ives, we're mining some of the paleochannel material at Neptune, which can't all be put in at the same time with some of the fresh ore, and we have to blend it. Often your stockpiles are a function of where you're mining and what you can actually feed versus what you need to stockpile. To get a process plant to operate optimally, we need the right feed of fresh and oxide materials. It's often a function of blending. Sometimes it's also cutoffs. The Granny Smith plant, we're not running that at full capacity. We have a campaign milling exercise where we run the process plant for two weeks in a month, and then we actually shut it down.
Often you will find that some of the high-grade material might come towards the end of the campaign period, and you can't get it into the process plant, and it gets into the next month. That can obviously impact ounces as well. Where possible, we are running our process plants at full capacity. It's not an issue of trying to keep material for the future other than blending. I think you will find that these stockpiles move up and down depending on the grade of material we're mining versus the grade we're processing and the cutoff dates. That's all I'll say on that. In terms of looking at our reserves, we've indicated across the group that for 2020 year-end, we're gonna be using a $1,300 gold price US for our reserves.
That's increased from $1,200, which we kept fixed, I think, for the last two to three years. The reason we're going up $100 is because cost inflation has probably weighted for this group, is probably somewhere between 2% and 4%. We've absorbed that over the last couple of years. We are certainly not gonna be putting in significantly higher prices to look at lower grade material, principally because we don't need to. We're actually filling our process plants already. Granny Smith, where we do have spare plant capacity, we're actually constrained by the mine. The mine can only get so much material out of the mine. If you look at the waste and the ore we're taking out, we're probably taking out somewhere around about 2.5 million tons a year. That's maxed for that mine anyway.
There's no more material that we could get out. We're gonna continue to adopt a very conservative approach to our cutoff grades. There won't be any significant change. In fact, at $1,300, I think that's probably gonna be it for next year and possibly even the year after. I think we should use this opportunity to maximize our margins. As I said, we don't have significant process plant capacity available anyway. The risk of dropping cutoff grade, Shilan, is sometimes you can lose focus on the high grade and end up substituting high grade for low grade and actually be in a world of pain that you never thought you'd be in. I've lived through a couple of price cycles, having been in this company for 24 years. The lesson I've learned is, let's stick to conservative cutoff grades. Let's maximize the margin.
Who knows, maybe in two or three years' time, if we're sitting in a very different price scenario, it can be looked at again. In terms of guidance, yes, we're still good with the numbers for the year. Obviously, if we see significant movement from here, we'll have to think about it again. The ZAR has got particularly strong. In the scheme of the overall group, we're not gonna be materially out even at these rates. I think the guidance is still good. I don't know if there's any follow-up questions you might have there.
It's okay. I'll actually come back. I'll rejoin the queue. I'll ask a bit later. Thanks.
Yeah. Good. Thanks.
Thank you. Ladies and gentlemen, just a reminder, if you'd like to ask a question, you're welcome to press star and then one. The next question comes from Patrick Mann of Bank of America.
Hi. Good day, Nick, Paul, and team. Something that caught my eye was the speaking about guidance for next year on sustaining CapEx, and saying it's gonna be around the $250-$300 an ounce mark, and probably nearer the upper end of that. Just doing a quick back of the envelope here, it looks to me like you're coming in at below $200 an ounce now this year. I mean, it could add $100-$150 an ounce to group all-in sustaining costs. Is that the right way to be thinking about it?
Yeah. I think the capital for this year is still forecasted around $600 million or so.
Okay. Not that much of a jump. Okay.
No. We've been saying for some time that sustaining capital will be in a range of $250 - $300 per ounce. I think, again, with the shenanigans that the gold producers are playing on cost definition, people like to push as much of this stuff into non-sustaining as they can, and then only talk about a sustaining capital number. The reality is we manage the all-in costs. Some of the additional spend, though, is probably going to expand the process plant of Agnew over a period of a couple of years. Right now, Agnew can do about 1.2 million tons a year. We're looking at a strategy that will gradually expand it to about 1.7 million tons over the next two years, starting with a crusher upgrade.
We needed to replace the crusher anyway because it's come to the end of its life, and so with a little bit of extra money, we can expand the crusher, and then we'll do a mill upgrade as well. With the exploration potential that's coming to the fore at Agnew, which I've talked about in previous presentations, we believe the time is right for us to reconfigure the assets in the group. One could argue that capital is growth capital, but at the end of the day, I don't think it matters too much because it's all part of the same capital. At Granny Smith, we've talked about the need for us to debottleneck the mine, given the fact that we're going deeper.
We have a metric that we look at called tonne-kilometres per hour, which is an important metric because the longer the trucks have to go deeper into the mine, they're increasing costs and there's less loads we can get out. We have to look at how we can actually offset that. The second decline, I think, is a good way for us to do that. That's capital that will come in next year as well. I'd argue though that is sustaining because it'll keep the operation at about 260,000 ounces. Then the Invincible complex continues to grow, so it's likely that we'll be spending more development capital to open that up. Again, one could argue that is growth, but for all intents and purposes, it will keep the operation at about 350,000 ounces a year for longer.
Yeah, $250-$300 is a good number, including obviously exploration that we spend. Some of the capital this year could have been impacted by COVID. There might be a little bit that goes into next year as well. Overall, I don't think we'll be that far off at the end of the year, Patrick, from that range.
Great. Thanks. Maybe one follow-up and one comment. You've put quite a lot of money into Agnew now with the new camp, solar plant, or renewable energy and now upgrading the plant. It does seem you guys must be quite confident on the ore body and the potential there. The other question was just on Granny Smith. I recall you were considering a shaft at some point because of the constraints you were talking about. Does the second decline now, is that the alternative? Is that now off the table or is that just pushed out and could come back again in future?
No, there won't be a shaft. It was either or.
Okay.
We've got the second decline. The second decline will go down to 90 level. From 90 level down, we've got two declines on either side of the ore body of those lenses.
Okay.
Getting the second decline down to 90 level will then enable us essentially to have twin declines all the way down. We'll see how that goes. For us, a shaft, I think if we could have went back, a shaft may have been interesting. The problem is, though, you've got to have confidence in the ore body, and it's very difficult to drill down to the deeper parts of the ore body from surface. It's very expensive. You can't really do it from underground until you actually open up the lens.
Right.
As you know, we've only opened up 100 level, 110, 120 and getting into 135 in a year or so's time. That's happened really over the last four to five years. We wouldn't have had the geological information to support that investment. The decline I like because it's lower capital and it's not going to impact us significantly in terms of our costs, and the production will just continue. I would say the shaft is off the table, Patrick.
Great. That makes a lot of sense.
Yeah. Makes a lot of sense for me, too. In terms of Agnew, yes, we are confident. Between the solar and wind farm and the new camp, that was already $150 million of spend. With what we're seeing coming of the Waroonga North area, with what we're seeing coming at the Sheba extensions at New Holland, with the Redeemer complex that continues to grow, Barren Lands, which looks like it'll be anything but barren, that we think is going to convert into resource and reserve in the future. I think Agnew, for those critics who thought that the mine was almost at an end, I think they're going to be surprised with what they see coming down the track, yes.
Thank you, Nick.
The next question comes from Rahul Bhat of Ninety One.
Thank you. Thanks for the call. I had two very high-level questions.
Sorry, Rahul, your line is a bit faint. Are you able to speak closer to your microphone?
Hello. Is this better?
Little bit.
Yeah. Okay. Sorry. I'll try to speak up. I had two very quick questions. For 2021, could you give any guidance on how much of your production are you looking to hedge? In terms of CapEx, next year is the year when you're going to spend the most for Salares Norte, and you're also saying sustaining CapEx is going to go higher. Could you give any guide on where you think CapEx is going to be? Thank you.
We're gonna give you guidance in February for the group for 2021. What I can say to you is, based on what we've said before, about 60% of the total capital on Salares Norte, which was $860 million including contingency, is scheduled to be spent in 2021. I think you can use that as a base. If you go back to what I said earlier, that sustaining capital is between $250 and $300 per ounce, for the existing operations, I think you've got enough information there to calculate it out. In terms of hedging, we have put a floor price in place for Australia of somewhere between AUD 2,200-AUD 2,300. Next year, we pay for all of that, and the full upside exposure is open.
We've got a floor price in Australia, and principally, we've done that because of the significant capital on Salares Norte next year. We want to give ourselves an underwrite, if you will, for that capital. There's no other hedges on gold in the group for next year, and there's nothing planned to be done for next year. We'll be fully exposed to the upside in the gold price, but protected on the downside for 1 million ounces of our production, which is probably close to 45% of the total group's production. I hope that answers your question.
That's perfect. Thank you.
Thank you. Ladies and gentlemen, just a further reminder, if you'd like to ask a question, you're welcome to press star and then one. The next question comes from Adrian Hammond of SBG Securities.
Afternoon, Nick. I just wanted to ask you if you still have the view that the group can sustain its production profile of 2 million or above 2 million ounces for the next decade. Does that include Salares Norte?
Yeah. I would say even without Salares Norte, 2 million ounces certainly can be sustained over the next eight-10 years. That's why we gave a range of 2 million-2.5 million ounces. With Salares Norte, I think it's quite likely we'd be at or very close to the 2.5 million ounces. If I look at the Australian assets, with what I'm seeing in terms of exploration potential at Agnew, I think certainly Agnew can look at eight-10 years comfortably. Granny Smith, I think with what we've got on the books already, we're very close to that in terms of reserves, and that's even before we've converted Zone 150. There's probably the similar size ore body down there than what we've seen in the Wallaby. Maybe up to a couple of million ounces of resource that we'll see there.
The St Ives Invincible complex continues to grow. I think that's looking good. Coolgardie I think is already at 10 years plus. There's more upside of depth there that we'll unlock. Tarkwa, I think you know, is already at about 10 years. Damang, I think it's a function of whether we do another cutback. We are doing an investigation into a mini cutback, which could potentially add another six to eight years. We'll finish that study over the next 18 months and make the call. South Deep, well, I don't think there's an issue of life there. Yeah, overall, excluding Salares Norte, we're looking very good for at least 2 million ounces over 10 years. With Salares Norte, sure, we can be challenging that upper end.
Just from an industry perspective, you've obviously decided to recapitalize your mines instead of going out there and exploring further afield. Is that a function of a decision you're making or simply that there's nothing interesting out there?
Yeah. One of the things we've learnt, Adrian, is that the best place to find gold is where you're mining it. That's served us very well in Australia. When we bought St Ives and Agnew back in 2001, a lot of people said to us, "Why are you buying these mines? They've only got four years of reserves." Well, guess what? 20 years later, we're still mining and, in fact, we've got, guess what? We've got about six or seven years of reserves at St Ives and building up at Agnew. Near mine exploration has proved to be very lucrative for us and lower risk, lower cost. The area that we do need to look at, though, is in Peru.
We know that Cerro Corona's life is becoming finite, so we are starting to think about earlier stage exploration in Peru, as we look to try and replace the asset over the next five to seven years, given that Cerro Corona's got about 10 years to go, but only five years of mining, remember. Because then we'll be storing the tailings on the pit. That is an area that we are going to become more active. In Chile, we obviously are very active in the camp, the Gorbea camp , which has probably about 20 properties in there, and that's going to take us quite a while to work through, because we do believe Salares Norte can grow into a significant camp scale opportunity.
At Tarkwa, we know that the ore bodies continue to extend, so we're doing some step-out drilling over there, and we're starting to see the ore bodies replicating. That makes good sense. Apart from that, I think the prospect of us doing early-stage greenfields in new countries, I don't think it's a strategy that we need to adopt. It's a strategy we used to adopt some years ago, Adrian. If you go back to 2001. Up to about 2012, we were exploring in 15 to 20 countries. We probably spent, if you add all numbers, we probably spent about $700 million or $800 million over 15 years, and we didn't get a lot out of it. Well, luckily, we got Salares, which has proved to be a discovery. That's high risk. It's high risk, and I think there's better stuff closer to home for now.
I think it would be a dilution of our attention. That's a bit of a long-winded answer.
Yeah. Briefly on M&A, Nick, I also hear that IGO is wanting out on their 30% at Tropicana. I mean, do these sorts of things interest you?
No, I don't think we'd be interested in coming in for a minority stake in any asset. I think if we were gonna do anything in M&A, it would have to be synergistic deals that made a lot of sense. To be frank, given the fact that we've got Salares Norte to build over the next two years, I don't think there's too much capacity in the group for us to do a lot more. High prices as well. I mean, very difficult to find value. The vendors will be wanting to use spots for the price. We're gonna be using $1,300. I think it could be a short conversation.
Yeah. Sure. Thanks, Nick.
Righteo.
The next question comes from Leroy Mnguni of HSBC.
Good afternoon, guys. Thanks for the opportunity. My question is just around the sustaining CapEx guidance. If you're saying around $250-$300 an ounce, how should we think about that sort of medium to longer term? Do you expect it to remain at the upper end of that range for a period of time? How should we think about inflation? I mean, is that more like a nominal number or should we be inflating it at that sort of 2%-4% over time?
Yeah, it's a good question, Leroy. I think certainly, I think for the next couple of years, at least, you can use that as a nominal range, $250-$300. I think the thing with sustaining capital is it doesn't happen in a straight line. It can be chunky at times. That's why we're giving a range. But I think as you get out maybe three, four years, you should really be inflating that number if you wanna put in your model. Based on today's, somewhere between 2%-4% is a good number. But I think certainly for next year and probably even the year after, that's still a safe range in nominal terms.
Great. Thank you.
Thank you. We have a follow-up question from Shilan Modi of UBS.
Thanks, guys. Maybe just switching gears a bit from what I was talking about earlier, but Damang, you did guide that the mine would have an improving grade towards the second half of the year and you've delivered on that. Maybe just talk to the outlook for Damang, in terms of life of mine impact, how we should be thinking about grade and cost for the next couple of years at the asset. Thanks.
Yeah, sure. I think we'll see a very good 2021, 2022, and 2023. You're probably gonna see production-- If you look at this quarter, now you can sort of annualize that production and you'll be pretty close. Probably somewhere around 250,000-270,000 ounce range for the next two to three years. I think costs, given the grade, is probably going to If you look at the reserve grade in our declaration, we're looking good on the reserve grade. It's about 1.8 grams per ton, I think overall. Cost therefore should be sort of around the $800 an ounce range over the next three years. Obviously, after that it tails off.
If we're going to make a decision as to whether we do another pushback. We'll have to make that decision in the next 18 months so we can start laying back the walls. The first part of that will be to lay back the walls and then obviously, start to strip around the areas we've finished mining. It's going to have to dovetail with the existing operations. It's quite possible there could be a production hiatus for a period of time, but we'll look at that. The other thing we're doing is, as a de-risker, we're going back to look at Amoanda extensions and Tomento East, which you may remember from a year or two ago, we were mining there.
One of the strategies, potentially, is to have that as an additional ore source like we did during the pushback, because you might remember that during the pushback, we were doing about 200,000 ounces a year. None of that was coming from the pit because we were just doing waste in the pit. Something similar, if we could replicate that again, and the chances are pretty good, that that might be the case. We could sustain production while we do another pushback. We're not looking to do a massive pushback. We're looking at what we call the concept of a mini cutback, where we would take a part of what remains, and that will significantly reduce the upfront waste that we have to move. I don't have a lot of details to give you because we're working through it.
I think over the next year, the team will give you more color on that as it comes to the fore. We've got to do a little bit of infill drilling as well just to prove up the resource at depth. That'll feed into the models, and then we'll do the financials. I'll probably give you a view hopefully by February 2022. I think that's a reasonable plan to work with.
Okay, great. Then maybe kind of the opposite of what Adrian was asking, would you be thinking of divesting of any of your assets?
Not really. I think at the end of the day, we've cleaned up the portfolio by and large. There's nothing that we would say we want to get rid of. I think everything in the group is making good money for us. Obviously, we're a little bit concerned about how things have played out at Asanko. The fact that the costs have gone up quite a lot, that we lost a high-grade source. I think we're working with our partners to assess what it looks like in the future. I couldn't give you a definitive view on that, but there's clearly work to be done there before we could form a long-term view. At this stage, we want to work with our partners to realize the potential that we saw when we bought into it. Certainly, all of the Australian assets are absolutely core.
Cerro Corona I think is core to us. It's going to make a lot of money over the next 10 years for us. South Deep now I think is doing pretty good. I'd like to back the team to continue doing the work and see where we end up possibly in another year's time. Yeah. I think the rest is looking good. I think the numbers speak themselves, hopefully.
Is there a scenario that you can take over management of Asanko? Instead of the JV partner mining it, you guys take over managing and mining the asset.
Yeah. Only with agreement. We'd have to get their agreement to that. I think at this stage, they've been gearing up. They've actually increased their technical team and their behavior indicates that they're very keen to continue to operate the mine, which is their contractual right. I think the short answer is no.
Okay. Thanks.
Thank you. Next is a follow-up question from Patrick Mann of Bank of America.
Thanks for allowing the follow-up. The political situation in Peru, do you think there'll be any impact on Cerro Corona? Thanks.
Having gone to Peru for the last 17 years, the regular change out of the prime minister or the president or both is something that I've become accustomed to having met probably seven of them in the last 10 to 15 years. No, I don't think so. The reality of Peruvian politics is what happens in Lima and actually what happens in the regions where you have the mines is two different things. I think the key relationships are with the remaining bureaucrats that remain in the mine ministry, in particular, environmental ministry. Luckily, even though the main pieces on the chessboard have been changing regularly, the chaps who do the real work in the background are still there. They're still able to process our applications and get the job done.
In the regions, it's fundamental to continue to build relationships with communities around the mines. They have the voice. The politicians in Lima, unfortunately, although they've promised a lot over the years, are not able to deliver too much. I'm not concerned at this stage with what's happening there.
Thanks very much.
The next question comes from Ed Stoddard of Business Maverick.
Oh, yeah. Hi, Nick. Nice. How are you today?
All good, thanks, Ed. How about yourself?
Good, thanks. I just have one very simple question. I just wanted to ask you once again about your solar power project at South Deep. Have you gotten the approval yet or not?
We have not got the approval yet, Ed. We now think that it's likely that this will go into the first quarter of next year. All the indications and everything I'm hearing indicates it's in process. You've heard that the government and our sector minister in particular, have said they're putting their full support behind it. Country needs it. I'm hoping that we'll have the approval soon and we can give you the good news. There's no reason why we shouldn't get the approval. It's just a process we're working through.
I just find the delay perplexing and just given the fact that they need to do so much else on this front and have made so many promises.
Yeah. No, look, I think it's taken longer than it should have. We're working through it, and we're encouraged, at least, by the support we're getting from the highest circles in the country's political circles.
Good. Can I just double-check? Sorry. As a follow-up, who is the ultimate regulator to give the green light here? Is this the DMRE or is it NERSA?
This is NERSA.
It's NERSA. Okay. Thanks. Cool. Thank you.
Thank you.
The next question comes from Martin Creamer of Mining Weekly.
Good afternoon, Nick. I just wanted to get an update on what is happening with the mechanization and automation at South Deep. If you can just update us on the thinking there and the progress that has been made or where you're at regarding mechanization and automation.
Yeah. Very briefly, there's a number of projects that we're looking at here. I think the most important one is the control room we have, whereby we're getting more real-time information about what's happening across the value chain. We are looking at remote loaders underground operated from surface. That project is still trialing. Impact breakers underground are now being monitored from surface. We're also looking to have sensors on all of our equipment so we can monitor where they are, what their condition is, et cetera. Those are the main subject areas that I would say we're working on at the moment. It's very much an incremental approach, Martin, across the value chain.
This being more advanced than where you are in Australia or elsewhere, or are you behind in terms of technology in South Africa?
I don't think we're necessarily behind. It's more a function of some of the OEMs have not yet released some of the latest prototypes to South Africa, like battery electric vehicles. We want to trial a battery electric vehicle underground, the OEMs have not yet released the prototypes to South Africa. They will do it in the next 18 months, whereas in other countries, they have released it. We're very much in the hands of the suppliers. We know what to do. We're in touch with people. We travel to these countries where this technology exists. We know what's there, and we have a clear roadmap to put it in place over time.
Just finally, if you do get the solar power, the renewable, will you consider green hydrogen using the excess for green hydrogen and would you use this to perhaps power some of your activities there?
We'll have to see, Martin. Yeah, we'll have to see. Yeah, I think let's get it working first. I mean, the idea is to reduce our reliance on Eskom. We believe that if you look at the average usage, we could be able to reduce our Eskom usage by maybe 15%-20%, somewhere in that range. That will already be a massive boost for us. Remember, we do need a base load of power to keep the cooling and refrigeration, ventilation going, running the shafts costs, et cetera. It's quite a lot of power that's going to be dedicated to that anyway. I think the first and most important step is just reduce the reliance on Eskom. We can bring down the costs. We can reduce the security risk on hand.
Thanks very much, Nick.
Welcome, sir.
Thank you. The final question is a follow-up question from Leroy Mnguni of HSBC.
Hi. Thanks, guys. Just a follow-up question on Damang . You seem to have improved your strip ratio quite a bit, and you also happen to be steepening your pit walls there. How much of that improvement is relating to the steepening of the pit walls, and how much of it can be sustained over the medium term?
Yeah. There's very little linkage to wall steepening, really, because we have strict geotechnical controls. That would actually save waste. It doesn't give you more ore. The thing is, we've moved most of the waste now. Wall steepening might be something for the next stage if we do the next stage. The reality of Damang is it's actually delivering what we said it would deliver. We said that once we get into the heart of the ore body, we're into the phyllites, we're into the Banket footwall in the intrusives. If you look at the blend of all of that rock, it's giving you a higher grade than what we were getting before by probably 50% or so. We're in the good stuff. That was the plan. There's nothing more to it really than that.
As I say, I think we'll see really good production from Damang over the next three years or so.
All right. That's clear. Thank you.
You're welcome. Any questions for Paul? We've got our CFO online. I'm sure you want to ask him a question. Here's an opportunity, because he knows all this stuff just as well as I do.
Great. Thank you very much, sir. That was the final question. I would like to hand over back to Mr. Nick Holland for closing comments. Thank you.
I'm gonna let Paul do the closing comments. Paul, do you want to give a quick concluding remark from your side or anything you thought I missed or anything you want to add? Over to you, sir.
No, Nick, I think you're spot on. We've de-risked basically half of the production for next year with the hedges in Australia. High capital spend, but that's why we've done the de-risking. Good quarter, and I think we're going to have another good December quarter. We're really halfway through it. That's my concluding comments.
Thank you very much, Paul. I just wanna thank everybody for dialing in today. Just again, be safe with COVID and we hope to see you face-to-face one of these days. I'm not too sure when, but have a good rest of the year, and we look forward to talking to you again soon. Thanks very much for your interest. Thanks, everybody, and goodbye.
Thank you very much, gentlemen. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your line.