Good afternoon, ladies and gents. Welcome to Gold Fields' 2022 Interim Results Presentation. Just drawing your attention as always to the forward-looking statements. Today I'm gonna take you through the highlights, safety and sustainability and the operations. I'll hand over to Paul Schmidt, our CFO, who will take you through the financials. I'll come back and talk to you about Salares Norte, give you an update on both Salares and the Yamana transaction, and then a conclusion. This has been a strong operational performance, and a strong cash flow generation performance in the first half of this year. All of these points that I make on the slide will be discussed in more detail in the slides to come.
Firstly, on safety, we're very pleased to announce that we've had zero fatalities in the first half of this year. We continue to make very good progress on the ESG front. We have just commissioned the Gruyere Solar plant in Australia and the South Deep Solar Plant. The 50-megawatt solar plant at South Deep is on track for commissioning towards the end of this quarter. On operations, we had a 9% increase year-on-year in gold production attributable to Gold Fields. On the financial side, another strong set of results, generating normalized earnings of just under $500 million, 16% up year-on-year.
The balance sheet continues to make great improvements with $118 million of decrease in debt, notwithstanding the Salares Norte capital and the dividend payments in the first half of this year. We have declared a payout of 35% dividend. That's at the top end of our current range of 25%-35% of normalized earnings. That increases from ZAR 2.10 a share to ZAR 3 a share, or a 43% increase year-on-year. Very pleasing to announce that we have no adjustments to the guidance that we provided at the beginning of this year, the guidance for 2022. For those of you who don't know Gold Fields, this is sort of Gold Fields' snapshot.
If you look at the box on the top right-hand side, we operate nine mines, one project in five countries. All the stats under the production, all-in costs and cash flows we'll be discussing on the slides to come. If I just draw your attention to the pie charts on the very left-hand side of the slide, you can see that we generated 44% of our production from Australia, 32% from Ghana, 13% from South Africa, and 11% from Cerro Corona in Peru. Roughly the same cash flow generated from each of the regions as their production. Turning your attention now to the safety and sustainability performance of the group.
Firstly, as I said in the highlights, very pleasing to announce that we had zero fatalities in the first half, and we've now gone calendar year, or 12 months fatality-free. On the right-hand side top chart, you can see the serious injuries for the group. We had three serious injuries for the first half of this year, so you can see the amount of serious injuries reducing. If you look at that blue line on top, you can see the severity rate of those serious injuries continues to reduce as well. Two out of the three serious injuries that we had in the first half of this year were related to slip and fall. The bottom chart on the right-hand side, you can see the total recordable frequency rate.
You can see a slight increase in recordable rates in the first half of this year. That's largely attributable to Australian operations, where we've had very high turnover, lots of new employees, inexperienced employees coming into the business. Of those inexperienced employees, coupled with the first half of this year, we had high COVID numbers in Australia. The shortage of labor and the high turnover of labor, we can see that impacting the smaller injuries that we're having on site. On the health front, we continue to make good progress as well. The majority of our workforce remains fully vaccinated. We had no COVID-related fatalities in the group this year. At the beginning of the year, when the borders opened for Australia, we saw the first positive cases.
We saw quite a big wave of COVID in Australia, but most of the cases were reported as mild cases. That did have an impact on the amount of people available at work. We continue also to make good progress on the technology that we're applying to both safety and health. In this particular example, this is the diesel particulate filters that we're putting on underground equipment being put in place so that we can improve the health conditions of the air that people breathe underground. Then also making good progress on the mental health programs that we're rolling out across the group. Our decarbonization journey, as I mentioned right up front in the highlights, continues to deliver good results.
If I draw your attention to the top right-hand side, picture, you can see that's the newly commissioned 12-megawatt solar plant at Gruyere, commissioned on the thirty-first of July this year. The picture underneath it is the South Deep Solar Plant. It's 120,000 solar panels that are in place. They've now got a 5-kilometer fun run around the solar plant. That construction's 95% complete, will be delivered in the third quarter of this year. Actually, today, Martin texted me this morning to say that we have just introduced five megawatts of power into the grid, into the twin shafts, and we'll be doing that every few days now, connecting five megawatts into the grid. We'll do that till we've reached 40 megawatts.
In next month, we should be able to connect the last 10 into the grid at the South shaft. Making great progress on the commitments we made for Gruyere and South Deep to deliver their solar plants this year. What we're now seeing is we're starting to prepare for the next wave of renewables. We now have the feasibility underway at St. Ives in Australia. That's gonna be 80-90 MW of power that we're gonna be seeking to install both wind, solar, and battery backup as a part of a microgrid. We're also doing the work now for the design for the Salares Norte solar plant that we plan to have in place in the first half of 2024. You've seen this slide before.
This is the recognition of our ESG achievements. We've started to see one or two rating agencies come through in the first half of this year. The rating agencies mostly deliver their results in the second half. We look forward to showing you the progress that we've made from the recognition that we're receiving for the work that we're doing on the ESG front. Turning now to our operations. Firstly, the group delivered a strong operational performance.
As I said in the highlights, we were up 9% year-on-year, the production attributable to Gold Fields to 1.2 million ounces, generating a free cash flow margin of 21% and delivering cash flow from operations of $518 million at an all-in cost of $1,352 an ounce. That was 6% up year-on-year. Australia had a great operational performance in the first half of this year, up 10% year-on-year to 527,000 ounces, generating free cash flow margin of 18%, with a cash flow of $235 million at an all-in cost of $1,211 an ounce.
That was up 2% year-on-year, but we did have a 6% weakening of the Australian dollar to the US dollar. The all-in cost in Australia in Australian dollars was up by 10%. West Africa had a steady performance. Tarkwa continued to deliver year-on-year, roughly the same number of ounces. We had a planned decrease of production at Damang, and Damang is meeting its targets for that reduced production, and as we said in the guidance for this year, that Asanko would be delivering less production. Overall, a steady performance from West Africa.
Free cash flow margin 22%, generating $154 million of free cash flow at an all-in cost of $1,230 an ounce, or 10% up year-on-year. In Americas, at Cerro Corona in Peru, we had a 31% increase in production. That's largely as a result of mining higher grade areas and higher recoveries. You'll also recall that in the first half of last year, we had that slippage on the east wall of the pit and so we had lower production last year. This is both a recovery from that setback last year, but also now mining the higher grade areas.
Free cash flow margin of 49% with free cash flow of $56 million at an all-in cost of $981 per equivalent ounce. South Africa had a great performance. At South Deep, exceeding its guidance, so production increased by 28%. That was ahead of the planned ramp up. We delivered a free cash flow margin from South Deep of 24%, generating cash flow of $74 million at an all-in cost of $1,425 an ounce or ZAR 705 thousand per kilogram. In rands, they were up by 5%, and all-in cost in dollars was down 1%.
South Africa, very similar to Australia, had a weakening of the rand to the dollar of 6% year-on-year. I've shown you over the last few reporting periods just a bit more detail around South Deep because we often get asked, is the production improvement that we're seeing sustainable? If you have a look at the underlying productivities that you see, we didn't do quite as well on the long-hole stoping tons. We had some challenges with the rigs. If you look at the right-hand side, you can see again, we had an improvement, an increase in the productivity from our development rigs. The whole fleets had another 4% increase year-on-year.
If we turn to the bottom left-hand side chart, you can see the gold produced for the first half of this year in tonnes. You can see 5.1 tonnes produced of gold. We did say to you that we would be producing between 9.6-9.7 tonnes of gold. You can see very nicely ahead of ramp up planned for this year. Again, you can see a bit of improvement in the productivity of kilograms per employee. The really great chart is the one on the bottom right-hand side.
If I take your, you know, draw your eye to the left-hand side of that chart on free cash flow, you can see in the period from 2010 to 2017, we were losing about ZAR 1 billion a year. In 2018 is when we had the strike and the big reset of the operations at South Deep, where we were ZAR 1.9 billion loss in 2018. From then on, you can see the upward trajectory. At least in 2019, we were cash positive, $34 million generated in 2020, $97 million in the whole of 2021. You can see in the first half of this year, we generated $74 million or ZAR 1.2 billion.
Compare ZAR 1.2 billion positive to the ZAR 1 billion that we were losing in that period from 2010 to 2017. We're starting to see a great performance and South Deep starting to properly earn its place in the portfolio. With that, I'm gonna hand over to Paul, who will take us through the finances. Thanks, Paul.
Good day, everybody. I think when the regions perform well and also having a just over $50 an ounce increased gold price, it's gonna translate into better results. On the financial side, makes it a lot easier for me. I mean, Chris alluded to it earlier on. If we have a look, normalized earnings up 16% to $498 million. Adjusted Free Cash Flow up 63% to $293 million. This translated to us being able to declare an interim dividend of 3 ZAR compared to 2.10 ZAR in the corresponding period last year. Our net debt has decreased to $851 million, and more importantly, my net debt to EBITDA down to 0.33 times.
If we look how the $293 million Adjusted Free Cash Flow was made up, $518 million from the ops. Chris spoke to it earlier, South Deep, $73 million free cash flow. Who would have thought of that four years ago? Really proud, and I'm glad we stuck it out with South Deep, and we're definitely reaping the benefits of South Deep now. If we look at the all-in cost, this is a reconciliation between the all-in cost for the six months, 2021 versus 2022, showing only a 6% increase year-on-year to $1,352. That's despite, which you'll see at the end of the presentation, one of the annexures, we are saying mining inflation for the group is around 11% that we are facing.
I think more importantly, I think this is one of the benefits of having a diversified currency portfolio that Gold Fields has, having rand, having Aussie dollar, and then the rest of our operations in US dollars. We have been one of the few companies, I think, able to maintain our cost guidance of between $1,370 and $1,410. Even at budgeted rates, we would be marginally above the $1,410. At forecasted rates, which are much lower, we are well within our range of guidance, and we've benefited from around circa $50 an ounce because of the exchange rate conversion of our South African and our Australian operations. I think the net of this is healthy balance sheet, net debt down to $851 million.
As I repeat again, net debt to EBITDA 0.33. What did we do with the cash flow that we did? We paid our final 2021 dividend in quarter one, $168 million. We invested another $145 million into Salares Norte and also managed to reduce my debt by $118 million. I think that's me. I'm gonna hand over back to Chris to do the Salares Norte update. Here we go.
Thanks, Paul. This is Salares Norte. Just a picture before I go into the detail. This is the picture of the processing plant, and you can see some fantastic progress being made compared to the same picture that I would have shown you at the beginning of the year. Let's go through some of the numbers. We have had impact again by a fourth wave of COVID that came through during the course of the first half. We've had a very serious and severe weather that impacted the progress in June, where we had three of the four weeks that we were unable to make any progress on the project.
If we look at the project, you can see that at the end of 2021, we were at 62%, and we've made actually, relatively speaking, good progress to 77%. If you sort of divided that by half, the performance of 15%, and you look at that's what we do each quarter, and you look at then three quarters to come, we can get very close to 100%. I think the point I'm making is that in the first half of this year, we were at the right run rate to deliver the project at the end of the first quarter. Total Capex spent of $145 million, as Paul mentioned a bit earlier, spent in the first half investing in this world-class project.
We did have another more impact from another wave of COVID, the fourth wave now. In the past, we've been able to make plans by moving production off the critical path, bringing in more contractors. As we start getting to the sharp edge now of delivery, what you're seeing is we having less ability to make other plans to catch up from the impact of COVID. I mentioned to you that we had severe weather impacted us in the month of June, but also in July. The impact of that is that we probably gonna end up delaying the project by between one and three months. Let me continue about the construction. You can see we were at 55% at the end of 2021.
We were at 73% complete by the end of H1. On the plant side, you can see here is where the majority of the work is happening, improved from 35% to 64% at the end of H1. On the mining side, you can see we were at 23 million tons at the end of 2021. We're now at 42 million tons. Making great progress on the mining side, ahead of plan, and we expect to reach first ore in the fourth quarter of this year. That's great because then we've got three months to get ore and stockpile ahead of the planned commissioning of the plant.
Exploration, we continue to explore in the district around Salares and spend $15 million on district exploration during the first half. I mentioned that because of some of the delay, because of weather and COVID, we could potentially face 1 months -3 months of delay. Now, you know, in the scheme of a major project, that might not sound like much, but if you look at our planned ramp-up that I mentioned to you at the beginning of the year, where we gave you a sense of what the ramp-up would look like as we anticipated to produce about 200,000 ounces, if we move that final quarter over, then you can see, whilst of course the gold's not lost, what it'll do is impact the production from next year.
It's a little bit early for us to say whether we are able to mitigate some of that delay, and certainly the team on site are doing all the things that they've done up to now, is to find ways to work around to bring some of that forward. The team are working on that now, but as we're running out of time now to get to the end, there is a potential that we might delay by a few months, and we'll update you on what that looks like towards the end of the year. Just an update on Capex. You'll remember that we said that that we had planned for $860 million of spend. That was the real number.
Because we had very little use or we had very little change of scopes, and we had used very little of our contingency, we were targeting internally to be able to try and deliver this project on $860 million in nominal terms. What we've seen is with the impact of COVID, having to bring more people onto site, having to put up more living accommodation to be able to de-densify the camp, all of the mitigating actions we've done, we said we'll probably increase our Capex between 6% and 9%. What that actually just meant is that we would get to $860 nominal, which is $920. Up to now, that still would've been delivering the project on time and on budget.
With potential delays that may add because of course the contractors will have to be on site for a bit. There is a potential for an increase in capital from $920 to $940. I think overall, as we manage some of the challenges that have been faced globally, with very, very few projects that we know of anywhere near delivering on time and on budget, I think the team at Salares Norte continue to do a fantastic job managing the headwinds and being able to deliver on time. A bit later, closer to the end of the year, we'll be able to give you more update and guidance on what the impact of any potential delays might be. Just a couple of pictures to see that it's really happening.
The picture on the processing plant on the top left-hand side, another view on the top right-hand side. The bottom left-hand side is the material handling. You can see the conveyor belt coming into the covered stockpile area. As that covered stockpile goes into the plant, you can see what that looks like. The filter plant on the bottom right-hand side under construction. Just on the mining front, you can see the two top pictures and the one on the right. Those are just different views of the mining that's happening. You can see very neat mining and ahead of plan. On the bottom left-hand side, that's the area that's now being prepared and is ready for the dry stack tailings.
You can see that area that's now been flattened out. That's where we're gonna put the liner on, and so that we can put the dry stack tailings on top of that. Compare that to a traditional tailings dam, you can see why dry stack tailings is such a material improvement in the way that we handle tailings going forward. Okay, then just a little bit of an update on Yamana. I'm not gonna go through the rationale of the deal, other than to just very, very briefly just touch on what we see. This slide came straight out of the presentation that we made on the eleventh of July.
That was the second presentation we made to the market, with just more update, trying to help the market and our shareholders and analysts understand a little bit more about our strategy and why this deal fits very neatly into our strategy. On the right-hand side, talk to, well, why the Yamana assets. On the left-hand side, if we think about the strategy, I think the points that we made is that Gold Fields has consistently invested to grow the value and the quality of its portfolio. As a matter of fact, all the assets that are now in the Gold Fields portfolio came about as a result of acquisitions. The second point is that actually all the work that we have done has rewarded shareholders with superior returns over the past five years.
We also have a track record that has shown that we can do the things that we say we're gonna do, and that we can put ourselves in this position of strength. The results that we're presenting today, I think, are a testimony to the strength that the company is in.
It's from that position of strength that we think that we can now look to deal with the challenges facing not only Gold Fields, but the broader gold industry of declining production and of less success rates with exploration. We've said, as we look to the strategy, we think that Yamana represents a great solution for us and a great, addition to us for the next phase of our strategy, and that we're gonna be investing in growing the value and the quality of our portfolio of assets and addressing the challenges that are facing the industry, replacing reserves. We think that we're doing this proactively from a position of strength. Why this deal?
We've explained in the last few presentations, and we've certainly spent quite a bit of time talking our shareholders through this, that we think that there's now that the Yamana assets are a winning combination with Gold Fields. They're a complementary portfolio that is greater than the sum of the parts. We have. It's not often that you get portfolios that make, you know, incredible industrial logic, that actually do complement each other. But we've also got strong convictions in our ability to be able to drive superior value from Yamana's assets that's way in excess of what we're paying for those assets.
Secondly, that we can unlock these world-class assets, that we've got a combination of technical and financial capability in our company to be able to realize the full potential of Yamana's assets, which potentially, in their hands by themselves, wouldn't be able to deliver the same set of value. Lastly, that we are gonna be creating a company with comparable scale, liquidity, diversification and all the operating metrics that you measure us on to our major peers. Except that we're gonna have a material value discount to them and a huge potential upside in the share price for our shareholders.
There's also potential for some capital and portfolio optimization that once we get to know the assets and potentially higher cost, smaller assets that have got less potential in the future, we'll be able to think about optimizing those portfolios even further. Because we have confidence in our near-term cash flow generation, we think that we've been able to increase our dividend policy. When we spoke to the market in July, we said that we would be increasing our dividend payout policy from 25%-35% of earnings to 30%-45% of earnings. That's irrespective of whether the deal goes through or not.
Dependent on the deal going through, we have said in 2023, to demonstrate to our shareholders that we are absolutely focused on shareholder returns and trying to alleviate some of the short-term dilution that our shareholders go through as we invest for future value, we're gonna be increasing our payout ratio for 2023 to 45%. The next big steps are the circular and the shareholder votes. The publication of the circular is likely to be end of September, early October. The shareholder votes then end of October, early November, and the transaction likely to close in mid-November. We have now South African Reserve Bank approval that has been obtained in July, so that's one regulatory step obtained.
There are now clearly the big next steps are the shareholder approvals and the remaining regulatory approvals. On the Yamana transaction, I think we're making good progress in helping shareholders understand the strategy, the timing, and the price, and that's gonna be further amplified in the publication of our circulars. How do we put the first half results together, and how do we summarize all of that? I think we would say that we are absolutely delivering on our promises. We continue to make focus on safety and make great forward steps, reducing the safety incidents in our group. We're delivering on our ESG commitments. We've got two amazing projects that have been delivered during the second half of this year. Strong production performance, +9%, unparalleled with our peers across the gold industry.
Strong financial performance, as Paul said. Normalized earnings, just under $500 million +16%. It's that we declare our dividends of Adjusted Free Cash Flow. The cash that we use to pay dividends and that we use to pay down debt of $293 million, +63% year-over-year. Dividends at 35% at the top end of our dividend policy payout ratio policy. Of normalized earnings, we're gonna pay $174 million. In rand terms, it's 43% year-over-year increase. The balance sheet's in a healthy position. Net debt to EBITDA from 0.4 down to 0.3 times. We've got the world-class Salares Norte project making good progress. Potentially will be marginally delayed, but overall, still making great progress.
This great project will come into fruition in the first half of next year. Lastly, we're making good progress with the Yamana Gold acquisition process, and we look forward to concluding that in the fourth quarter of this year. Group guidance, I think as I mentioned right up front on the first highlight slide, all of our group guidance remains intact as we told you at the beginning of the year, whether that's gold production, all-in sustaining costs, all-in costs including Salares, all-in costs excluding Salares and Capex, all remain within the guidance that we gave you at the beginning of the year. Lots of work to focus on.
Clearly, the inflationary headwinds that are facing us all, finding ways to mitigate those to make sure that our costs are lower than inflation and finding ways to do that, delivering on Salares, implementing our strategy and getting, Yamana transaction over the line. That's our focus area. Enough to keep us busy. With that, I'd like to thank all of the Gold Fields staff, for an incredible first half. Thanks as always, for your amazing work, what you're doing to deliver, and demonstrate to our shareholders and to the market that we're delivering on our promises, that Gold Fields is in great shape, and for those that are shareholders of Gold Fields benefiting from the financial, payouts and the returns of capital to shareholders.
Thanks to the Gold Fields staff and with that, myself and Paul are available to take your questions. Thanks.
Okay. Okay, Chris, we're gonna start with questions from the conference call. Judith, over to you.
Thank you. The first question comes from Patrick Mann of Bank of America.
Thanks very much for the presentation and taking the question. I wanted to ask maybe just around the Yamana acquisition and your interaction with shareholders. I mean, we've seen that discounts narrow quite a lot. I know you've been doing a lot of work you know, talking to shareholders and trying to make them see what you see in terms of the strategic rationale. Geographically, what are you seeing? I mean, what work do you still think might need to be done to convince everybody? You know, the spread is still relatively high, although it's narrowed quite a bit. Maybe what are still the stumbling blocks or the questions you get from shareholders about the deal?
I mean, why isn't it a sort of slam dunk? The second question is maybe what are the alternatives, right? If for whatever reason Yamana doesn't go through, you know, what would Gold Fields look to do then? Thanks.
Okay, Patrick, thanks very much. Lots of questions in there. I think that the first observation that you make is entirely right, that first of all, when the deal was announced in that first week, you know, I think we were down up to 28% or 29% in those first few days. Subsequently since then, as we have been talking to shareholders, we've been helping the shareholders to understand what it is about the strategy and the deal. We have done two domestic and international road shows to talk to shareholders and help them understand that with the two presentations.
I think what you've seen is, although it doesn't really feel like it because of the very big reduction in the overall, you know, markets for gold and for all mining stocks. What you have seen is you have seen that return. We're down, I think this morning we were down to 7% versus the market. Overall, I think we've made a great recovery. We are starting, we are seeing shareholders buy more shares. I think it's been fairly quiet over the last two months, which is traditionally quite a quiet time, in the European and the US and Canadian markets. You know, I think, Patrick, the thing is that the reason that we're coming back is I think shareholders are starting to understand us.
The spread has come down from over 20%, as you said, I think down to 9% this morning. We are seeing shareholders starting to come back. It's not a particularly exciting market overall, but I think as the tide starts rising in the market, we should see Gold Fields rising with that. I think the next big point that you ask is, what's next? I think the next step is the circular. We're putting a lot more detail into the circular, and one of the reasons why the original timing is a little bit delayed is because we're putting the valuation of the Yamana Gold assets. They're doing that with independent advisors.
We're gonna be putting valuation into the circular, and then you'll be able to see the value that we can see, and the price that we've paid. I think overall, that's a very positive next step is the circular, and then post that, we'll again engage with our shareholders, and I think that'll be the last push to get shareholders to what we believe will be a positive vote. I think we're making good progress, Patrick, and but it does need the next big step now is the circular. That's why on this roadshow that we're doing now, it's really talking about the results, not really aimed at a marketing of the Yamana transaction. Yeah, then the question that you ask around the alternatives, there are always alternatives.
I think the point that we've made in the past is that Gold Fields is in a position of strength, and we can look at other alternatives. I mean, I think the message to our shareholders is, you know, why look at other alternatives that are not nearly as attractive and that include a lot more risk and that require us to build more assets in an environment where Capex inflation is massive and the risk associated with building big capital projects to be able to grow our portfolio of assets. While we're very able to deliver and grow and build assets, we don't want to really go out and develop a new portfolio of assets, we have to do two or three of these projects at a point in time. Alternatives exist.
We don't think they're nearly as valuable as this collection of assets that we get with a Yamana deal. We're saying to our shareholders, that's by far the most valuable way for us to invest in the future value and growth of our portfolio. That's the reason. I mean, ultimately, though, if shareholders don't vote it down. Or if shareholders vote this down, which we don't think we're going to see, and we think is a real likelihood of getting shareholders over the line. But in the event they don't, Gold Fields is in a good position with other opportunities available in the future. Thanks, Patrick.
Thank you.
The next question comes from Adrian Hammond of SBG Securities.
Sorry, Adrian, we can't hear you. Still can't. I'm not sure if you are asking a question, Adrian.
Apologies, sir. The next question comes from Marikus Oho of Faxit.
We also can't hear Marikus.
Marikus, can you hear us?
We can hear you. Judith?
I'm not sure why he's not responding, sir. I'm going to then place Adrian Hammond next into the call. That's Adrian Hammond from SBG Securities.
Hi, Chris, can you hear me?
I can hear you perfectly. Thanks, Adrian.
Yes. Okay. I'd like to ask something about South Deep, first of all. Just on the current grades trending above reserve, how should we look at these grades going forward, given they're quite substantially above reserve grade? What's the target that you set yourselves for the annual reef tonnages? Just on Salares Norte, you know, there's obviously a bit of a delay that's potential. The chinchilla relocation issue, I mean, that's been put on hold. Why is that, and is there any risk posed to the project from this? Lastly, on Damang, what's sort of latest thinking or any change in your thinking around Damang and the closure liability that you'd have to incur and plans around the workforce there? Thanks.
Shall I talk to the grade? Yeah. Yeah, there's nothing weird about that look. I mean, if you look at the produced gold and the mined gold, you see our mined gold is probably a little undercalled at the moment. Our Mine Call Factor is a little bit higher than that. Actually, rather than there being an issue, I'm just turning to that South Deep page. Thanks. You know, if I look at the yield, the underground reef, which is currently at 6.6, there's nothing strange about that. We just happen to be going through a higher grade area with more stoping tons and less development. But the
If you look a bit up in that table of 6.2 grams a ton from underground reef, I think we just at this point in time undercalling that. So a little bit higher Mine Call Factor, it's a great problem to have. But I think that'll settle down over time, and I think we're still saying that we will deliver the life of mine grade at 5.5 grams a ton. That's right, eh? So I think, you know, there will be patches, but the way that we have to mine, we will over time be seeing higher grades than we've been getting in the past as we mine more stoping percentages to development. I don't know what the percentage of reef tons is to development. Do you know?
Maybe we can get back to you, Adrian. Adrian, we'll get back to you on that. I don't think any of us can recall that number off hand. On the chinchillas at Salares Norte, there's no issue with the potential delay yet. Remember, we still said there's a number of years before we need to even start stripping in that area where the chinchillas are located. That ultimately is only about 10% of the production from South Deep. It's still in its way out. South Deep. You got me stuck on South Deep, Adrian, so on Salares Norte. At Salares Norte, let me say that again, we only need to start mining where the chinchillas are located, you know, in at least two years from now.
We don't need to start mining before then, and it's only about 10% of the production at Salares Norte will come from that area. There is still a potential for us to go underground in that area as opposed to open pit. We are not concerned at this point in time that we put the chinchilla relocation on hold. The chinchilla relocation was on hold since we had the two individuals that died. Since then, we've been engaging with the authorities, we continue to engage with the authorities, and we think that I mean, we weren't gonna move chinchillas in the middle of winter either. We think that, you know, by the time the summer comes, we think we'll have made good progress.
I think the overall point I wanted to make is that the relocation of the chinchilla is not an immediate threat to the ramp up and the continued production from Salares. At Damang, our latest thinking is we said that we are going to be doing the pre-feasibility during the course of this year, and we'll probably make a decision on the pre-feasibility by the end of the year. Nothing really is happening or nothing to announce, but the pre-feasibility on Damang is underway. We'll know at the end of the year if we're likely to invest more into a further cutback or to be going underground and whether we're gonna proceed from pre-feasibility into feasibility.
A little bit early to say, Adrian, but still on track to do the things that we said we're gonna do, and that is the pre-feas this year. Closure liability, Paul, I mean, other than to say we are providing.
We are providing, yeah. We contribute every year towards it. I think we're about 40%-50% provided already, Adrian, towards the balance. Ghana's got the same dispensation as South Africa, where you have to legally provide X amount every year. We've got quite a big fund towards both Tarkwa and Damang.
Thanks, Adrian.
The next question comes from Jared Hoover of RMB Morgan Stanley.
Afternoon, Chris and team. Thanks for the call. A few questions from my side, please. I thought maybe I could start with Yamana and maybe ask Patrick's question in a different way. I mean, I know you've given shareholders a sweetener with, you know, in the form of, bumping up the dividend policy and agreeing to pay out at the top end of the range if the deal goes through next year, effectively nullifies any dilution on the dividend. But let's say the circular does come out and you go to your shareholders and they still aren't over the line as you expect them to be, is there potential for there to be a further sweetener? I mean, obviously, notwithstanding the fact that Salares Norte needs to ramp up and we don't know where gold prices are going.
That's my first question. My second is on Australia. I mean, I think we all know that there's COVID-19 absenteeism problems there as well as tight labor markets. I just wanted to find out if you've taken any short-term measures to prioritize production for 2022 as opposed to development, which could eventually result in maybe some of your longer term production being a bit lower than planned in that region. My last question is on Salares Norte. It seems like I mean, you can never plan for these things, and you don't know how a ramp-up of any mining project will go, but it sounds like you have a degree of confidence that any potential delay might be a maximum of three months.
Are there any things that you are seeing at the moment that could potentially mean that that delay could be a bit longer than three months? I'll leave it there. Thanks.
Thanks, Jared. Look, on Yamana, it's an interesting question about, you know, can we or will we further sweeten the deal? I mean, half of our shareholders, well, the Gold Fields shareholders are fighting with us because they believe that we have paid too large a premium. I'm not sure that they're gonna be particularly happy if we come back and say, "Oh, no, we want to sweeten the deal further." You know, we've got to get both sets of shareholders over the line. I think it's a great deal for Yamana shareholders, and that they get a premium, but they also participate in a company that going forward is absolutely likely to be greater than the sum of the parts. So I think it's a great deal for Yamana shareholders. Likewise, for Gold Fields shareholders, I think it's a great deal.
We get the longer-term assets and the growth potential for our business going forward that is way better than going to do a whole lot of single deals or other things that we may have to buy. It's a great option for them. Of course, for the Gold Fields shareholders, there's an investment required. Like any investment, there's an upfront investment. What you require is, over the longer term, a return on that investment. I don't think it's gonna be that Gold Fields shareholders are gonna be particularly happy with us if we all of a sudden want to sweeten the deal. Now, I don't think at this point in time that we are thinking about sweetening the deal, and I do think we're getting shareholders over the line.
While one never says never, that's not something that's on our radar at the moment, Jared. In Australia, we're not taking short-term decisions to get the production out now. We have had some impact for some of the contractors that do development for us with shortages of labor, like we've had in our own staff, which is mostly contractors anyway. We are not taking short-term decisions. If you have a look at the amount of money we're spending on exploration and development, investing in the camps around us, investing in ESG, we're not taking short-term decisions, Jared, to maximize production.
As a result, as a matter of fact, actually, in all of our quarterly production reviews, when we talk to our Australian team, we say we would much rather have you get your development than chase short-term scoping production. There's nothing short-term about our business. We know that this is not a six-month business. This is a 10-15-year, as we stand now, life of mines for those assets, and we've got to make sure that we can consistently deliver over all of those years. No, we are not in the business of short-term decision-making that impacts us later. Then on Salares. Look, you know, I think we.
You know, one doesn't really know because, I mean, at the moment we're getting more of the plant, for example, closed up, so we should be able to be sheltered and do more of the construction under shelter. The area of the plant that we're delivering now is in the area that we're still at the foundation levels. Now, when the wind's blowing in the way and the snow keeps going over your foundations and in amongst all your scaffolding, then it's very difficult to work there. While we had heavy snowfalls, the real challenge for us there was the very, very high winds. We had very high winds that actually made it unsafe to even move where you couldn't see. I mean, we've got some videos there that it's just impossible to see.
You can't put people onto a construction site in that kind of weather events. Now, we're getting towards the end of winter. Exactly what the weather's gonna do, we don't know. I think we're getting towards the end of winter. Are we getting to the end of the production? The mining is in place, most of the plant's in place. We know what we need to deliver, and I think it's 99.5% of all the equipment that we need is actually on site. Never mind just in Chile. You know, I think the level of risk is decreasing all the time. As we get to that sharp end, as I said, if there's, you know, if we don't have people because there's COVID, our ability in the remaining area to bring extra contractors on is diminishing.
You know, I think we're there or thereabouts, the risk is declining, like, by the day. There's no big risk events that we can see other than if we've got shortage of labor. That doesn't mean that, you know, the project won't get delivered. As you've seen from the pictures, as you've seen from the progress, we're making good progress as to exactly whether we would, under all of these, very challenging conditions globally, not just for us. You know, the fact that we are so close to delivering this project on time, I think it's a great testimony to the work that the guys have done. Now, whether or not that's gonna be 1-3 months delay in that area, I think it's still gonna be a great job.
I think we are reducing the risk all the time, Jared. You know, we can't, at this point in time, see what would materially delay us any further than what I've just described.
Okay. Perfect. That, that's great, Chris and team. Appreciate it. I'll leave it there.
Thanks, Jared.
The next question comes from Leroy Mnguni of HSBC.
Hi. Good afternoon, guys. Thanks for the opportunity. My first question is on Damang. I know you've said it doesn't look like you're going to be investing in extending the life at Damang. I was just wondering if there's any scope for you to go underground instead as a life extension. Just with that, is there any other opportunities in your portfolio where you can transition from open pit to underground to reduce the impact on the environment? Just on your costs, you seem to be containing costs really well compared to your peers, so well done for that. I'm just curious as to what you believe you're doing differently and maybe if there are any risks that you see to your costs increasing above your expectations in the medium term.
Thanks, Leroy. Okay, I'll just quickly run through those. From Damang, you know, I don't think we said yet that we have made the call that we won't be investing in the open pit. But the fact is the pit is getting to the end of its life. Now any cutback that we do, you know, you get less return for that. You need to do big cutbacks. In the case of Damang, we've actually got to go through one of the old tailings dams. It's not looking like a slam dunk that the next big cutback is on the cards. We just need to do the work. Joshua and his team in Ghana are absolutely focused on completing the work. Then the numbers must talk to us.
If there's a return to be made that's acceptable, then we can invest. If it's not and there's better places for the company to put their capital, then we must consider those options. One of the options that you correctly point out is the potential to go underground, that ore body does go underground. They're not high-grade ore bodies. Again, that's not a slam dunk that it makes sense to go underground at Damang. We just need to finish the work, Leroy.
By the end of the year, we should have a feel at the pre-feasibility level, and that's exactly what a pre-feas must do. It must give you the indication of actually should you stop now or have you got a very real likelihood of this project becoming something, and then you take those options and do finer engineering work on those. If, you know, if it's not gonna make sense, then we must stop that early. In somebody else's hands, of course, this may make a whole lot of sense. Those are the kind of things that we're balancing at the moment. Are there other areas that we can go from open-pit to underground? Well, we are doing that at St Ives with Invincible.
As we start finishing off the main pits at St Ives, we're going underground, increasing our production. I'm trying to think. In Australia, we already have three mines that are underground. We only have the one open pit at Gruyere. At Tarkwa, it's gonna be a long time before we go underground there. I mean, that's 15, 20 years before that'll even become a possibility. It doesn't make sense for us to go underground at Cerro Corona, so that's not likely to be the case. Salares Norte is where we've first got to start, and then there's sort of 11 years of life of that pit, and we think that there's likely to be more potential in the region. We are underground at South Deep. I don't, you know.
Maybe at Damang, which is, we've already spoken about.
Maybe.
Agua Amarga.
So Abby's just reminded me, potentially Agua Amarga, that's the area where the chinchillas are. That might be a potential to go underground. There was one at Asanko. One of the options is that we are very interested in is, you know, to go do the exploration because some of those areas look to us to be very interesting to potentially go underground. So that's something always on our mind. But the fact is, you know, yes, there's environmental issues you've got to consider, but the fact is that it's easier and cheaper mining from open pits. So your first port of call is always gonna be open pit mining if you can. But I think we've been forced over time to go underground, Leroy.
Do you wanna talk about the costs?
Yeah. I think, Leroy, as I alluded to earlier on when I did the presentation, I said we are benefiting from having a mixed currency portfolio. You can see on the individual assets, we have increased some of the all-in costs. But as I said, we've got about a $50 exchange positive that is helping us come in line with our guidance. Also, there's been some really good cost control and moving around by the regions to try and mitigate some of the impacts of inflation. But you can't run away from 11%. But you know, when we guided, we guided 0.76 for the Aussie dollar, we're down at 0.7. That's helped us also on the rand. That is what has really helped us.
I think having a mixed currency, it does help you when you're reporting a single currency and our reporting in U.S. dollars.
No, very clear. Thank you.
The next question comes from Raj Ray of BMO Capital Markets.
Thank you, operator. Good afternoon, Chris and team. I have three questions, if I may. My first is on as a follow-up from Adrian's question on South Deep. If I remember correctly from the site visit, you said the grade is a function of where you are mining. The east was the highest grade than the central and the west. Just wanted to get a sense of what your ore mix is looking like for the rest of the year and going into 2023. Second question was on the Salares Norte Capex. If you can give us some idea. So the increase, is that net of the benefit from the Chilean peso hedge position, or is it excluding that? Just kinda touch upon that. Lastly, you know, on your investments in your current assets.
If you're looking at demand, for example, are you still using the same criteria? If I'm not, correct me if I'm wrong, it was $1,300 long-term gold and 15% after-tax IRR. Is that the same criteria that you use? Then, we are looking forward to the valuation assumptions for the Yamana assets that's gonna come with the information circular. Are the assumptions in terms of commodity prices similar that you have used, that you'll be using for those as well? If you can touch upon that. Thank you.
Raj, sorry, I didn't hear your last question. Do you wanna just talk? I know you said that you're looking forward to the valuation, but I'm not sure if there was a question after that.
No. Yeah, I just wanted to see, ask if the assumptions with respect to commodity prices and everything are the same that you'll be using for the valuation when you come out with the Yamana asset valuation in the information circular.
Okay, thanks. Okay, I'll take South Deep, and you take the Salares Norte.
Salares Norte.
Okay, go for it.
No, it doesn't include the hedge. I had my monthly review yesterday. The hedge benefit is sitting at $37 million at present, so that would be deducted from the total capital bill that we've guided. Yeah, it would be $37 million. Assume we end up on the $940 million. We would realistically net end up at around $900 million.
Thanks.
Okay, South Deep, the grade. One of the things, if you look in, I'm not sure if you've got, Raj, the results booklet, but I'll tell you the numbers anyway. In the very final page of the results booklet at Appendix two shows the South Deep production plan. There you can see we're mining roughly equally across the corridors in the very western side. The left-hand side, we're mining 20%, the next corridor, 22%, 15%, 9%, 14%.
What you can see, so we don't have an opportunity, and neither do we want to, is push a higher grade area because at that depth, if with that level of seismicity, if you start pushing your mining fronts, one leading too far in front, then you're ending up in big trouble by inducing seismicity into those areas. There's nothing strange about the mining. Yeah, we're in a higher grade area at the moment, but you can see the shape of those mining fronts. If you look at that results presentation, you'll be able to see that it's actually really disciplined, the results, the mining that the South Deep team are doing.
Yes, we happen to be in slightly higher grade areas, but we have no choice but to follow the sequence and mine consistently through with all of the corridors advancing at the same rates. Investment criteria. Yeah, there's nothing new about the investment criteria. We haven't changed our reserve and resource numbers. We haven't changed our investment criteria. I mean, with inflation over time, we'll have to think about is getting a return of $1,300 or 15% viable. You know, but the fact is that nothing has changed in our investment criteria. We are not doing the valuation of the Yamana assets. Yamana's independent advisors are doing that valuation. It's the...
Because, I mean, we don't know those assets to that level of detail, and it's independent valuation that Yamana Gold have commissioned to deliver that. I'm assuming that it'll be at similar gold prices, given that if we look at their resource and reserve price is very similar to ours. So I don't know what those exact numbers are, and I guess that will be declared when they deliver that valuation. That's where that.
That's very clear, sir. Thanks a lot.
The next question comes from Marukys Coco of Faxit. Marukys, your line is open. You can ask your question.
Yeah, we cannot hear it.
Yeah, Judith, there's nothing coming through. Potentially, we should move on. I'm not sure what, Marukys, what the problem is. Just while we're waiting to see if Marukys comes on, just a thought has come to mind on the valuation, Raj, to answer your question. I think the way that we have used the relative valuations has always been on market consensus. I think you're gonna see. I think you're likely to see market consensus numbers. For example, market consensus gold prices being used as the valuation metrics as opposed to what our long-term resource and reserve prices will be. That way, everyone can see the relative valuations in the same way. It was just a belated thought. Thanks, Raj.
Okay, I think that's all the questions from the conference call, so let's take a few from the webcast. Herbert from Investec. Is the delay regarding Salares related to the chinchilla rescue and relocation? You touched on that, but let me just finish that off.
Okay. Herbert, absolutely not. Remember I said to you the work that we need to do in the chinchilla area, we only need to start the mining in that area. Start the stripping in more than two years out from now. We only need to start mining their ore in five years from now. We have absolutely no nothing to do with the chinchillas is impacting the current performance of the plant. For example, the chinchillas aren't in the plant. They're out in a rocky outcrop in the Amarguras in the region. I mean, they're way away from the plant. There's nothing about the current plant construction. As you saw, the mining is ahead of plan and will deliver ore in the fourth quarter of this year.
There's nothing around the mining. Mining's ahead of plan, ore will be delivered on time. We'll be able to get ore into the plant and into the stockpiles and ore stockpiled for the commissioning. No issue with the chinchillas when it comes to current performance.
Okay. Next one from Ryan at 361. Would you consider selling South Deep to fund M&A?
Ryan, yeah, a couple of years ago, that would've been a good question. Now, given the amount of cash that South Deep is delivering, there's absolutely no reason. As we said, a couple of, you know, a year and a half back, we said, South Deep is a core asset to the portfolio. We're not selling South Deep. It's like any other asset now, you know, that's delivering good cash flows. It's delivering good production. It's part of the portfolio. It's earned its right in the portfolio. No, we're not. We don't have South Deep on the for sale with a for sale sign around its neck. South Deep is delivering well, generating cash.
A couple of years back, if we'd sold South Deep, we would've got a fraction of the money that we're making for it now. It's very good return and value to shareholders, it being part of our portfolio.
Okay. This one's probably for you, Paul. Neil from Ninety One. Do you have any issues getting cash out of Ghana? Is the cash generated in Ghana kept onshore or offshore? Related to that, has the operating environment in Ghana changed, or is it still the same as it has been?
I think Chris cannot comment on the operating environment, but on the currency, there's no issues. We are allowed to sell our gold in dollars. We have to repatriate a minimum of 30%, and convert it into cedis. We actually repatriate a lot more because our cedi bill is a lot higher than 30%, so no issues at the moment with keeping cash outside of Ghana.
Yeah, nothing changing on the operating front. Look, all of us can see that the Ghana government's under pressure. There's been no overtures. I mean, there's, you know, things are dynamic in Ghana, but nothing that is preventing us from operating well there and returning cash to shareholders from Ghana.
Okay, Chris, that's it. Back to you for closing comments.
Thanks very much, Avi. Thanks very much for your time, all of you that are on the call. Yeah, I think we've had a great set of results in the first half. You know, when we first announced the Yamana deal, there were some concerns that perhaps we were, you know, Yamana wanted to do something else because we were looking to hide something in Gold Fields. You know, I think the results today have confirmed what we have said, that Gold Fields is in great shape. We're doing all the right things. We're investing for the future, and the operations are being well run, and we're generating cash, and we're returning cash to shareholders, and we're investing for future value growth.
A great set of production performances compared to many of our peers in the gold space. You know, I think this is a good set of results with growth in production, costs under control, investing for the future, and returning cash to shareholders. I think a great set of results and thanks very much for the opportunity to talk you through them. Thanks very much.