Ladies and gentlemen, thank you for standing by, and welcome to Endeavour Mining's Q3 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After management's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. Today's conference call is being recorded and a transcript of the call will be available on Endeavour's website tomorrow. I would now like to hand the call over to management. Please go ahead.
Hi, everyone. I am Martino De Ciccio, Vice President of Strategy and Investor Relations. I'd like to welcome you to Endeavour's Q3 results webcast. Before we start, please note the usual disclaimer. On the call today, I am joined by Sébastien, Mark, Joanna, and Patrick. Today's call will follow our usual format. Sébastien and Joanna will start by discussing the Q3 operational and financial highlights, and Mark will then walk you through the details mine by mine. We will try to be as quick as possible to leave time for questions at the end. I will now hand it over to our CEO, Sébastien, to walk you through the highlights.
Thank you, Martino, and hello to everyone from Burkina Faso, where I'm currently. 2021 is shaping up to be a tremendous year for Endeavour, and it was particularly pleasing earlier this week to be able to host our board members on-site to show them the progress being made. I would note four recurring themes which I believe are the hallmark of us becoming a resilient and reliable business. First is our continued strong operating performance. We are on track to again beat our full-year production guidance for the ninth year in a row and produce over 1.5 million oz. Second is our continued balance sheet strength with a close to zero leverage ratio. Third is our focus on shareholder returns, which has seen us return nearly $225 million to shareholders since just the beginning of the year.
Fourth is our success in advancing a robust organic growth pipeline. The Sabodala-Massawa Phase One is on track for completion in the fourth quarter. We have a number of studies currently underway, and we recently announced our exploration plan to discover up to 20 million oz over the next five years. Moving to slide seven, we have provided a snapshot of our key operational and financial results, and we will go into more details on these in the following slides. As the third quarter is typically the rainy season, comparison to our record second quarter result is not necessarily the best reference point. I think a better comparison is to analyze the performance versus Q3 last year and year-to-date versus last year, specifically on a per-share metric, given the recent transactions that were completed.
You can see here that production has doubled versus the same year-to-date period last year, while costs have decreased by 4%. More importantly, the cash flow per share has increased by over 30%, and the adjusted net earnings per share have increased by over 50%. On slide eight, you can see our strong performance across our key operating metrics. Our production performance to date has put us well on track to achieve the top end of our guidance range while keeping all-in sustaining costs within our guidance range. Turning to slide nine, Endeavour takes pride in our focus on safe work practices and systems, and our ultimate aim is to achieve zero harm performance. As many of you know, we reinforce this by having a group safety KPI in the annual bonus scheme every year.
Our lost time injury frequency rate remains low compared to industry standards, five times lower, in fact, than the industry average, with just two LTIs during the quarter and a lost time injury frequency rate of 0.21x for the past twelve months. However, we will always make it a priority to drive that figure even lower. Alongside our focus on safety, we've also been supporting the COVID-19 vaccination campaigns in our host countries. This started a bit later than in the U.K. and Europe, and I'm pleased to report that over 50% of our employees are vaccinated, with that number increasing every week. Following a record second quarter, the rainy season in Q3 had a limited impact on production. This quarter, we actually performed better than initially budgeted and were particularly pleased with the performance of Houndé and Sabodala-Massawa.
Houndé is benefiting from the high-grade ore from the Kari Pump deposits, while Sabodala-Massawa grades increased due to higher grades from the Sofia Main pit. Compared to last year, we increased Q3 production by 138,000 oz, driven primarily by the integration of the Teranga asset into our portfolio and higher production at both Houndé and Ity. All-in sustaining cost increased simply as a result of the scheduled higher sustaining capital spend during Q3. This year, our diversification is stronger with seven mines in production spread across three countries, accounting for an increase of 537,000 oz year- to- date, compared to six operating assets in two countries in 2020. We've also seen a drop in our all-in sustaining cost of $36 per oz on a year-over-year basis, which is a strong achievement given the industry inflationary pressure.
Turning now to slide 12, touching upon our cost and inflation controls, we thought it would be helpful to share a bit more color on the subject. Following the Semafo and Teranga transactions, we've been able to leverage our collective strengths as the largest mining company in the region to renegotiate longer-term contracts with price variation provision for key consumables such as fuel, steel, reagents, and tires. By using our increased group tender volumes, we've been able to secure contract terms that give us greater cost certainty well into 2022, and in some cases, as far out as 2025. In some instances, we've achieved significantly better prices compared to what Teranga and Semafo were paying. We have also increased our efforts on managing our supply and stock containment across the group.
Given we have many operations in West Africa, we can assess our spare parts inventory as a region and not in isolation at the mine site level only. These efforts have helped us navigate through the cost inflation with the industry that the industry has seen. Moving to the next slide, our all-in sustaining margin continues to be very healthy and mirrors the trends seen on the previous slide. Given our low all-in sustaining cost per ounce during the quarter, we had an all-in sustaining margin of $858 per oz at an average realized gold price of $1,763 per oz. That's a high margin of over 50%.
Compared with the Q3 last year, our all-in sustaining margin has increased by more than $90 million, and this is partially due to stronger production at our legacy mines and, of course, the acquisitions of Semafo and Teranga assets. On slide 14, we can see, you can see the trend of our operating cash flow, which increased by $110 million over the third quarter of 2020. We saw strong cash flow in the third quarter compared to the second quarter of 2021, despite lower realized gold price and sales. This is because Q2 is typically the quarter where we pay higher taxes. On the following slides, Joanna will take you through our financial performance in more detail. Joanna, if you want.
Thanks, Sébastien. Moving to slide 15, we bridge our Q3 operating cash flow over that of the second quarter. Q2 performance was not fully representative of the operating performance due to our tax installment payments, which are always higher in the second quarter of the year. You see here that this was the largest factor in explaining why operating cash flow was better in Q3 versus Q2, despite lower production, as we paid $51 million more in Q2 for tax payments. This largely offset the lower realized gold price and production, with details provided in numbers one and two on the slide. Regarding working capital, it was a decrease of $14 million in Q3 2021 compared to an increase in Q2 2021, mainly due to a decrease in accounts payable at Boungou, Ity and Mana, due to the timing of payments in the two quarters.
This was partially offset by a decrease in inventories resulting from the unwinding of the fair value adjustment to stockpiles at the Sabodala-Massawa and Wahgnion mines, as well as the decrease in inventory, stockpiles and finished goods balances at Houndé. Slide 16 shows how our liquidity has evolved during the quarter. Financing activities during the quarter include repayments on long-term debt of $80 million, $100 million of shareholder and minority interest dividends, and $35 million on share buybacks. Investing activities included a $55 million spend on sustaining capital expenditures, $42 million on non-sustaining CapEx, and $11 million on our growth projects. At quarter end, Endeavour's liquidity remains strong, with $760 million of cash and significant headroom, with $370 million undrawn on our credit facility.
After the end of the quarter in October, we also restructured our long-term debt. We refinanced our existing bridge loan that was used to repay the Teranga higher cost debt facilities when we acquired Teranga with a $500 million fixed rate senior bond offering. The bonds have a 5% coupon and mature in 2026. We also refinanced our existing RCF with a new $500 million unsecured RCF. The new RCF has an interest rate of 2.4%+ LIBOR and is due in 2025. The proceeds of the notes, together with our cash on hand, were used to repay all amounts outstanding under the company's existing loan facilities and to pay fees and expenses in connection with the offering of the note.
Our new long-term debt facilities extend the maturities of our debts, as well as providing enhanced financial flexibility and additional liquidity headroom. Turning to the next slide, page 17 shows our balance sheet continuing to strengthen as our leverage ratio is close to zero at 0.05x net debt to adjusted EBITDA. This quarter, we generated over $300 million in operating cash flows, and despite paying a $70 million dividend and buying back $35 million worth of shares, we were still able to continue improving our balance sheet and maintaining our net debt at around $70 million. In fact, if we'd wanted to, we could have been in a net cash position by now.
With our capital allocation framework, we are taking a balanced approach where we are continuing to strengthen our balance sheet while also continuing to invest in our exploration, our growth projects, and crucially, in rewarding our shareholders. Moving to slide 19, we have a detailed breakdown of our net earnings over the past two quarters. As usual, I won't go through every line here, but we'll address a few of the most significant items. Our corporate costs and our acquisition and restructuring costs were significantly lower during the quarter because of the slightly elevated costs in Q2 related to our listing on the London Stock Exchange and the completion of several integration projects related to the Teranga transaction in Q2.
Our net earnings and adjusted net earnings were lower during Q3 2021 due to lower earnings for mine operations. Due to lower gold sales at Houndé, Karma and Wahgnion due to the anticipated lower production during rainy season, as well as the lower realized gold price of $1,763 per oz in Q3 compared to $1,791 per oz in Q2. I'll now hand it back over to Sébastien so that he can comment on our shareholder return program. Sébastien?
Thank you, Joanna. Moving to the next slide, I would like to reiterate our commitment to shareholder returns. Already this year, we've delivered over $220 million in shareholder returns, and this remains a key capital allocation priority for us. We are keen to reward shareholders, which is why we outlined a three-year minimum progressive dividend outlook earlier this year. Our minimum commitment for this year is $125 million and is expected to increase to at least $175 million by 2023. I say this is a minimum dividend because it will be supplemented with additional dividends and share buybacks, provided that the prevailing gold price remains above $1,500 per oz, and that our leverage remains below 0.5x net debt to adjusted EBITDA.
During Q3, we paid our H1 interim dividend of $70 million, which is over half of our guided fixed minimum dividend for the full year. Shareholders can expect more than the fixed minimum of $125 million to be paid for this year. In addition, we're continuing share repurchases, and since launching the program in April, we've bought back $94 million of shares. We still believe our share price is significantly undervalued and makes a good capital allocation to continue buy back our shares given our strong cash flow generation. As you can see on this chart, our attractive shareholder return program has us very well positioned versus our senior gold peers from a yield perspective, in particular, when you add up our dividends and the active buyback program.
Looking at growth, we are fortunate to have built a robust pipeline which is able to compete for capital. The immediate priority is to complete the phase one expansion at Sabodala, which is on track to be completed next month. We are currently commissioning five out of the six packages with the gravity circuit to be added in December. I can comment about it because we just visited the progress on-site yesterday. We are also making good progress towards completing the definitive feasibility studies for Sabodala-Massawa phase two, Fetekro, and Kalana. As we have had so much exploration success this year at Sabodala-Massawa and Fetekro, we will finalize resource updates at these two projects in the coming weeks and incorporate the new resources into the DFS. We expect to publish the results from all three studies in Q1 next year.
Moving now to exploration. Those of you who have followed our story closely since 2016 know just how important exploration has been to our value creation success. We have already discovered 8.5 million oz in a short time frame. This has allowed us to not only extend the mine lives of core assets to beyond 10 years, but also to discover a new project as well. This year, we are on track to discover a further 2.5 million oz of Indicated Resources, as we have had very good exploration results from the drilling programs at all three of our cornerstone assets, meaning Ity, Houndé, and Sabodala-Massawa, with new discoveries at each site expected to be published in the coming weeks.
Following the acquisition of Semafo and Teranga, we've been busy developing a new five-year exploration program to prioritize our exploration efforts and integrate the new assets. We've applied the same unique ranking and screening methodology, which has underpinned our success, and the conclusion is that we remain extremely bullish on the prospective nature of our portfolio. As you may have seen a few weeks ago, we published our new exploration strategy, which is targeting to discover between 15 million-20 million oz of Indicated Resources over the next five years at less than $25 per oz. This represents discovering more than two times our annual mine depletion at a cost that is over three times lower than the global average discovery cost. At each of our assets, we see potential to more than replace depletion.
Achieving this goal will not only provide us with production stability, but also strategic flexibility as we advance our pipeline projects. What this outlook is also showing is that when factoring in historic production, Sabodala-Massawa, Noumbiel, and Ity all have the potential to be over 10 million oz endowments and are expected to account for the bulk of our future discoveries. Because it is very unusual in the industry to publish discovery targets, we've been asked over the recent weeks, why take the risk and publish these ambitious targets? Well, first, we believe that yes, while ambitious, these targets are achievable. These are not arm-waving numbers. We've done a lot of work to assess our potential and stand by these. Beyond this, the other reason is because we want to be accountable and transparent with our exploration investments.
Just like our operations team is accountable for production and cost, or our project team is accountable for timelines and CapEx. O ur exploration team is also accountable for the money they spend and the ounces that they discover. It's important for them, and for me, to be able to compete for capital within our capital allocation framework. Of course, they keep finding higher grade ounces and new projects for less than $25 per oz. We will, of course, continue to be more than happy to invest further and further in their success. Before I hand it over to Mark, I just wanted to touch on our listing on the premium segment of the London Stock Exchange in June. We've increased our liquidity significantly in the U.K., as we are seeing strong demand and growing interest from U.K. and European generalist funds.
About a quarter of our volume is now traded on the LSE, and nearly 20% of our shares outstanding have migrated over to the UK. These are strong stats for just the first few months of trading, particularly when compared to some of our dual-listed peers. In September, we were included in the FTSE 250 and the FTSE All-Share indexes, which we expect to continue to drive both direct demand and passive demand as investors start to take note of our index inclusion, which should continue to boost our liquidity on the UK line.
As our share price continues to perform well, we have our sights on becoming eligible for other indices. Next up could be the FTSE 100, which has a market cap review date on thirtieth November. As of right now, we are just between the 90s and 100s position, so we're watching that closely. I will now hand over to Mark for a detailed review of our operations. Mark?
Thank you, Sébastien, and hello to everyone on the call. I'm joining this webcast from the Ity gold mine, where we have made great progress this year on so many fronts, including recently receiving the final approval to allow us to start mining and processing ore from the Le Plaque deposit. As you can see on slide 26, this past year has been a very good one for us. We are on track to beat our full year 2021 production guidance and deliver record production for the group. Production increased by over 131% year- to- date versus 2020 due to the full benefit of consolidated production from Sabodala-Massawa and Wahgnion, and the strong operational performances, most notably at Ity and Houndé, while the group all-in sustaining costs have remained fairly flat.
Moving to slide 27, production at Sabodala-Massawa increased in the third quarter of 2021 compared to the previous quarter, mainly due to the good grades being mined in the Sofia Main pit at Massawa. Thanks to the good progress made on the phase one upgrades at Sabodala, we are progressively able to feed higher grades through the plant while maintaining throughput and recovery efficiencies. Total tons mined also increased due to a high proportion of oxide material mined in the Sofia North pit and good productivity of shovels and excavators, all of which contributed to improved mining and processing unit costs during the quarter. Mining in the Sabodala pit was recommenced in the quarter in order to progress the waste stripping program for future years' ore production.
Despite these improvements, all-in sustaining cost per ounce increased slightly during the quarter, mainly due to an increase in the strip ratio associated with the waste stripping in Sofia North and our highest sustaining capital spend, which was mainly related to the purchase of additional mining equipment. Given its strong performance year- to- date, full year 2021 production is well-positioned to be near the top end of guidance. The Sofia Main and Sofia North pits are expected to continue to contribute the majority of ore mined for the rest of the year, while waste extraction at Sofia North and Sabodala pits will continue. Advanced grade control drilling is being undertaken at present at the Massawa CZ pit, along with waste dump sterilization and bush clearing activity in order to be ready for mining next year.
On slide 28, I would like to provide an update on the progress of the CIL plant upgrades at Sabodala-Massawa. We are tracking slightly ahead of schedule for completion of phase one by the end of the year, with most packages going through commissioning. The gravity circuit will be the last package to commission in early December. The upgrades will allow us to process more of the high-grade free-milling Massawa ore through the Sabodala processing plant. The definitive feasibility study for phase two is well underway, with early works focused on de-risking the project schedule, including additional engineering design and procurement of long-lead equipment. Following successful exploration drilling, resource updates are expected to be published in quarter four and will be incorporated into the study, which is scheduled to be published in early 2022. On slide 29, you can see the photographic evidence of progress on phase one.
The picture at the top left shows the additional electrowinning cell, while the top right picture is of the carbon regeneration kiln building and elution tanks. The bottom left picture shows a different view of the carbon regeneration and elution area tanks. Lastly, the bottom right picture shows the top of the additional leach tank. On slide 30, production at Houndé is on track to be near the top end of guidance, thanks in large part to the success at Kari Pump. Better than expected mining productivity during the pre-stripping phase and some positive re-resource reconciliation in high-grade zones have boosted production and helped lower all-in sustaining costs. Total tonnes mined increased marginally with the startup of Kari West and continued waste stripping at Kari Pump and Vindaloo.
Ore tonnes mined decreased significantly as scheduled to limit mining of the flat dipping Kari Pump oxide ore during the rainy season, with focus on pre-stripping of the Kari Pump Phase two pit. Tonnes milled increased slightly and was sourced from Kari Pump and Vindaloo center pits and supplemented by stockpiles of Kari Pump ore built up during prior quarters. Overall, slightly lower grades resulted in lower production quarter-over-quarter. All-in sustaining costs increased due to a combination of drawing down stockpiles in quarter three compared to building stockpiles in quarter two and increased capital associated with waste stripping. Moving to Ity on Slide 31, where we have also had a very strong year- to -date. Production is on track to be near the top end of guidance.
Strong performance has been down to a combination of higher throughput grade and higher recoveries based on feeding more Bakatouo high-grade ore rather than a semi-refractory Daapleu high-grade ore, which has a lower recovery. The mine has also benefited from detailed review and simplification of the ore stockpiling and blending arrangements, coupled with the use of a mobile crusher and power screens to create a more homogeneous oxide product, which is fed through the surge bins as opposed to the main jaw crusher, and which allows us to get the higher throughputs that we've been achieving. During quarter three, production decreased as guided due to the lower average process grade and tons of ore mined as we focused on stripping activities at Bakatouo, Ity, and Koanshu pits. Ore was mainly sourced from Bakatouo and Daapleu, as well as the heap stockpile, supplemented by ore from the Ity and Koanshu pits.
We started mining at Le Plaque during the quarter and expect to start feeding ore from there during quarter four, which would contribute some higher grades and increase our blending optionality. All-in sustaining cost per ounce increased due to much lower ounces sold compared to the previous period, despite lower operating and capital costs through the drawdown of stockpiles during the rainy season, which also has a negative impact. Moving on to slide 32 at Boungou, production remained in line with the previous quarter as the greater throughput and recovery rate were offset by lower grades. Total tonnes mined decreased in quarter three following the accelerated mining activity in the first half of the year in order to catch up on the waste mining shortfall from 2020.
The focus was on ore mining in the lower grade phase two of the West pit and waste stripping in the East pit and phase three of the West pit. All-in sustaining cost per ounce decreased compared to the previous quarter due to the decrease in sustaining capital resulting from less stripping at the West pit and a decrease in unit mining and processing costs due to shorter hauls associated with the near-surface phase three stripping and increased plant throughput. Boungou is expected to achieve its full year 2021 production guidance, which would mark a good year following the mine's restart. On slide 33 at Mana, production for 2021 is well positioned to be near the top end of guidance. Production was very consistent quarter-over-quarter on account of maintaining a similar blending profile of fresh ore from both the Wona open pit and Siou underground.
Total open pit tonnes mined decreased compared to the previous period as the Wona South stage two and three pits merged into a single pit at depth, with the strip ratio progressively decreasing through to the planned end of mining by mid-2022. Total underground tonnes of ore mined at Siou decreased as a result of a lower contribution from development headings, as the mine is now largely developed, which was offset by a higher contribution of strip production. All-in sustaining costs increased slightly due to higher processing maintenance costs and much lower pre-strip waste capitalization compared to the previous period, though offset by a build-up of ore on stockpile. In the last quarter of 2021, strip production will continue at Siou underground mine with progressively lower development, which will be offset by commencement of decline development from the new Wona underground.
Open pit mining activities at Wona will continue to wind down through to completion by the first half of 2022. Moving to slide 34 at Wahgnion, which is also on track to achieve full year guidance. Production decreased during the quarter as lower mill throughput and lower recovery rates resulted from processing a higher proportion of fresh material with less high moisture content oxides processed during the wet season to minimize plant blockages. Both total tonnes and ore tonnes mined decreased in quarter three due to the impact of the wet season and the increased focus on waste stripping. Ore was sourced from the Nogbele North, Nogbele South, and Fourkoura pits. All-in sustaining cost per ounce increased compared to the previous quarter, mainly due to higher unit mining and processing costs and continued focus on TSF construction and less ounces sold in the period.
Turning to slide 35, at Karma we are well positioned to meet full year production guidance as well. During the quarter, production decreased due to the lower average grade as well as the expected lower recovery rates, which resulted from the higher proportion of high copper and carbon content ore from that was stacked from the GG1 pits. The all-in sustaining cost per ounce increased despite lower mining costs due to less ounces sold compared to the previous quarter. Looking forward, mining activity will continue to focus on the GG1 pits in the last quarter of 2021, supplemented by ore from the Rambo pit. Overall, quarter three was another strong and consistent quarter across all of our operations, despite the wet season, where we continued to improve our performance through better planning and mining sequencing.
As a group, we are well positioned to beat our full year production guidance and meet our all-in sustaining cost guidance. As Sébastien mentioned, this will be the ninth year in a row that we've met our guidance, which is something that we are incredibly proud of and is a testament to the quality of our assets and the strength of our team. With that, I'll pass back to you, Sébastien.
Thank you, Mark. Before we close, I just wanted to reiterate that our business remains resilient and is on track to deliver its ninth consecutive year of meeting guidance, as mentioned again, Mark. It is this ability to consistently deliver on what we say we are going to deliver on across all aspects of our business that has granted us a strong social license to operate, and it is why we believe we are a trusted partner to all our stakeholders. Our resilience as a business is what also enables us to continue to invest in organic growth through our successful exploration program and our exciting development projects opportunities while ensuring we are able to continue to return capital to shareholders over and above our guided minimum.
Before we move on to questions, you can see our key upcoming catalysts listed here, which we have described throughout the presentation. Interestingly, this call is made through multiple locations. I'm calling from Ouagadougou in Burkina Faso, where I will be meeting the Prime Minister tomorrow, and after two days at Sabodala. Mark is calling from Ity in Côte d'Ivoire. Joanna just came back to London after three days at Sabodala. This is not a sign of traveling arrangements easing and reopening after two years of COVID. This is what we do on a continuous basis, including during the COVID and lockdown period. Being on the ground with our host countries and at our mine sites is how we've been growing this incredible platform in West Africa, and that we will continue to develop irrespective of COVID or security perceived restrictions.
On that closing note, I would like to thank our team once again for their hard work this quarter and look forward to presenting our results at year-end. With that, I would like to thank you all for dialing in and open the line up to questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session, prioritizing covering analysts due to time constraints. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. This will only take a few moments. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question. The first question is from the line of Ovais Habib from Scotiabank. Please go ahead.
Thanks, operator. Congrats, Sébastien and Endeavour team, on a solid quarter, and a clean beat, despite the rainy season. Just a couple of questions from me. Starting off, year -to- date, you know, Endeavour has produced around 1.14 million oz, and really achieving the top end of guidance implies about, you know, Q4 production of at least 350,000 oz of gold. Now, you produced 380,000 oz in Q3, about 409,000 in Q2. Now, Q4 is typically Endeavour's strongest quarter. Should we expect Q4 to be around the Q2 level? Any kind of color you can provide on that?
Thanks, Ovais. I knew you would ask the question. I think what we safely said is we're on track to reach the top and potentially obviously beat the upper end of the production guidance for the year. I think that there are a lot of work going on, and as you know, we are embarking in strong capital investments in 2022 and 2023. So I would simply say that we will be on track on Q4 with similar numbers as Q3 and Q2, in between Q3 and Q2. The objective is not to overshoot in terms of production.
There is a lot of work to be done at some mine site in order to open up new deposits and do some pushbacks to prepare for 2022 and 2023. I think what we want is to be consistent and make sure that we prepare properly, you know, for 2022 and 2023.
Sounds good, Sébastien. Just based on that, in terms of sustaining capital, now, how do you see sustaining capital kind of going into Q4? Is it expected to decline quarter-over-quarter as most of your stripping campaigns for the year are complete or about to be complete? Essentially just trying to gauge the expected free cash flow for Q4.
I would say that, you know, the—I think we've demonstrated that, you know, if you put aside specific one-off items, you know, on taxes and so on, which we paid, you know, mainly in Q2, what we're trying is to be consistent at current gold price environment in, you know, getting around, you know, $150 million-$200 million of net free cash, you know, for the business. So, you know, that's what, you know, we will be again, you know, trying to target, ensuring that we prepare properly 2022 and 2023. In terms of sustaining capital, we will be in line with, you know, around what we had in Q3.
There were some big CapEx that were done in Q1 and Q2. As I said, I wanna make sure that, you know, we do prepare properly also 2022 and 2023.
Okay. Just a final question from me. In regards to FTSE 100 inclusion or potential inclusion, I believe that's based on market cap. On that end, are you already above the cutoff mark or where does that stand?
Say that again, sorry.
In regards to the FTSE 100 inclusion, I believe that's based on the market cap of the company. Are you already above the cutoff mark?
The way it works is there are quarterly reviews, I mean, for the FTSE 100 inclusion. When you are below, I mean, in the top 90, you are automatically included in the indices. If you are between 90 and 100, then it depends on, you know, how long and how stable you've been in for a certain period in this 90-100. If we look at the last few days, you know, based on the increased share price and on the back of gold price, we are currently, you know, just below 100. We're now into the 90-100 top companies in the FTSE.
It will really depend on how, you know, things evolve over the next, I would say, next 3-4 months, to see whether we're able to either get into the top 90 or remain on a sustainable basis in terms of number of days within this 90-100 to be able to get included into it. We're getting there, and I think that, you know, we don't have any rush. You know, we're just pleased to see that, you know, progressively, you know, shareholders and investors are recognizing the strong quality of the business that we've been developing, in particular after the successful integration of Sabodala, Teranga and Semafo.
Thanks for the color, Sébastien, and thanks for taking my question. That's it for me.
Thank you.
The next question is from the line of Dan Shaw from Morgan Stanley. Please go ahead.
Hi. Just one question from me. Another strong performance from an operational standpoint, and you're obviously flagging some upside risk to the guidance. Can you just outline from your perspective what the main factors have been driving that outperformance relative to perhaps your budget assumptions? Are these things that can potentially carry on over into 2022, or are they more one-off in nature? Thank you.
Sure. Well, I think that, you know, as we try to highlight is, you know, we've been doing a stronger Q3 compared to, you know, the budget we expected. Usually Q3 has, you know, some risk because of the rainy season. I think this year was, you know, well prepared, but, you know, we had some concern on some of the recently acquired assets. I must say that, you know, there was a strong production at Sabodala-Massawa and also strong production at Houndé, which allowed us to have this stronger Q3 than initially anticipated. That's a good news.
The two main factors, I mean, for those increased production, in particular at Sabodala-Massawa and Houndé, were clearly the higher grades that we are getting from both Kari Pump for Houndé and from Sofia for Sabodala-Massawa. You know, Mark, do you wanna comment on top of that? Overall, very pleased, you know, with the Q3 and going very strongly into Q4.
Yeah, sure. I guess there's a couple of factors. For example, at Ity, with what we were doing through the surge feeder, being able to sustain a very good throughput in the processing plant above what we had targeted. As Sébastien mentioned, to be able to sustain that through the wet season was something that we were particularly proud of. For Houndé, the Kari Pump pit has performed well, and for Sabodala, the Sofia Main pit has performed well. Mana has been very consistent through both the Wona South and the Siou underground. That'd be the main contribution to the strong performance of the year.
Thank you very much.
Thank you. The next question is from the line of Don DeMarco from National Bank Financial. Please go ahead.
Oh, thank you, operator. Hello, Sébastien and team. Congratulations on a great quarter. Just a couple questions from me. First of all, on your share buybacks, do you plan to maintain these or was this more of a tactical move recognizing a time when share prices were lower?
Thanks, Don. Well, no, I think we you know, the way we're looking at it is really through the layers of capital allocation. W e see today that I mean, we believe that we are still strongly undervalued.
Just seem to have lost Sebastian's line there. Please stand by while we reconnect.
Don, Sébastien is just reconnecting, perhaps I can jump in here. What Sébastien was saying was that, we're looking at the share buybacks as part of our capital allocation strategy, and ultimately it's competing against other investments in our business. As long as we can, you know, continue to see a strong return, that's competing with the 20% IRRs that we're seeing on projects, we can continue to do buyback. You would've seen, within our Q3 results that we did about $35 million in Q3 alone, and $94 million for the year- to- date.
Yeah. Okay. Thanks for that, Martino. Maybe I'll just give it a second to see if Sébastien reconnects, otherwise I'll continue with my next question.
Perfect. I mean, the team with Mark and Joanna are also available to take questions. Given he's in Ouaga with poor connection, I suggest we continue, and Sébastien will join as soon as he can.
Okay. Sure. Well, with that, we have the Sabodala-Massawa DFS completed next month, as was indicated. You know, per guidance, we're modeling non-sustaining CapEx increasing into Q4. We expect this to continue to 2022. Two questions. For phase two, can you remind me of any potential scope changes, that we might expect versus the previous Teranga study? Inflation has been topical across the industry. Do you have any preliminary comments on inflation pressures as you're preparing this DFS?
Sure. On the Massawa phase two, we ran many trade-off studies and ultimately decided that the PFS route was the best one. Perhaps Mark, you can comment more on what we're seeing on the project side.
Yeah. It is too early to give any sort of hard numbers on any inflationary impacts, though we certainly know that there will be, you know, just some of the indications on steel price and shipping costs and a few other aspects. In terms of from a scope perspective, probably one area that we're really focusing on was just looking at how we deal with the transitional ore. You know, at the start of the top of the pit, you've got oxide or you know, free milling ore, and then you've got the fully refractory, but then there's zones that alter between the different lenses of the ore bodies, but also at different depths that will be transitional in nature.
We've been looking at how we would best do that, which is most likely through the flotation circuit and then the float tail going to the CIL plant. That's been probably the main difference, if you like, to the Teranga study.
Okay. Thanks so much, Mark, and thanks, Martino. That's all for me.
Hey, Don, sorry, I apologize. My line was cut off.
Oh, no problem, Sébastien. That's okay. I've asked my two questions. I'll just pass it off to the next person in queue. Congrats again on this quarter.
Thank you, Don.
Thank you. The next question is from the line of Justin Stevens from PI Financial. Please go ahead.
Hey, guys. Congratulations on a good quarter. Obviously it's nice to see despite the rainy season that everything's ticking along well. Most of what I was looking for has been already asked and answered. The only thing I was just wondering is if you could give us, obviously with these DFSs for Fetekro and Kalana, coming down the pipe, what's the sort of rough timeline you'd expect in terms of permitting, before you'd be looking to potentially make a construction decision once those studies are in hand?
Sure. Hey, Justin. Well, I think on both projects, whether Fetekro or the BIOX® plan for Sabodala-Massawa, we do have all the licenses in place. I t's now just about decision for construction which is required, which will be made on the back of the publication of the feasibility studies. Both feasibility studies, you know, should be completed by year-end, beginning of next year. A gain, you know, we'd expect construction decision for both projects, you know, sometime in Q1. It's about then an 18 months, you know, construction period for both projects.
Great. Can you remind me about Kalana as well?
Kalana, you know, we've been waiting, I mean, to see the DFS for Kalana, but what we said is that, you know, we would build only two projects in parallel at the same time. Right now, and again, you know, providing there is no changes during the feasibility studies release, you know, we clearly see the BIOX® for Sabodala-Massawa and Fetekro to be, you know, stronger projects in the short term than Kalana, which is somehow good because then it will give more time for Kalana to do more exploration and be able to grow the project. If you look at the pre-feasibility study for Kalana, we've been looking at something which is more around 150,000 oz annual production for 10 years.
What we are looking for in projects, I would say, that are, you know, significantly above 200,000 oz annual production per year, which is the case of Fetekro and obviously the Sabodala-Massawa project, which is critical for, you know, bringing Sabodala-Massawa into a tier one territories. Yeah, I would say that, you know, without having yet the DFS, I'm pretty convinced that the outcome would be construction decision on the back of DFS for Sabodala-Massawa and for Fetekro, and give more time for Kalana in order to continue to build the pipeline so that Kalana would come, you know, in the, in the rest of the pipeline, in two or three years time down the road once the further exploration is done and that we're able to continue to grow the Kalana project.
Got it. That makes sense. Yeah, just to confirm there, you'd be happy building, say, you know, like, yeah, based on priorities and how the numbers look, but you'd be happy building Sabodala phase two and a greenfield project in tandem, obviously as long as, you know, the gold price hangs in where it is.
Yeah, exactly. I mean, as a team, you know, we feel comfortable in running, you know, both projects in parallel, in particular because you've got one which is a brownfield with already a lot of the infrastructure, and the other one being a complete greenfield, but a complete greenfield in a country where we had already two constructions with Agbaou and Ity. We know extremely well, you know, Côte d'Ivoire and the environment. Yeah, we feel comfortable in building those two projects in parallel.
Sounds good. That's it for me. Thanks so much.
Thank you very much, Justin.
Thank you. The next question is from the line of Anita Soni from CIBC World Markets. Please go ahead.
Anita Soni, that's a new one. Good morning, guys. Most of my questions have been asked and answered. I just wanted to ask a little bit more about cost expectations going into next year. I noticed that at Boungou you had talked about some of the costing at the higher end because of security and protocols there. Could you specifically talk about cost pressures at Burkina, and then also just review some of the cost pressures that you have across your operations?
Sure. What I think, you know, the cost I mean is really a function of the grade and the throughput for the different mines. We've got, I would say a pretty strong visibility on those, for the next few years, you know, with the life of mine plan. What we are monitoring is really the additional inflation pressure that, you know, we would see on some of the mines linked to the supply chain. The good thing is that, over the last 18 months, we've been able to consolidate and renegotiate a lot of the key contracts, thanks to, you know, new volumes that we added with the Semafo and the Teranga acquisition.
We had some very strong and positive outcome of all those negotiations, including the most recent one that were done between June and September, being able to, you know, through that ensure that we would have on current prices a limited inflation, you know, cost on our cost base, you know, for 2022 and for some of those key commodities, until 2023 and 2024. I feel, you know, pretty comfortable, you know, for the time being, given the strong contracts that we have that, you know, we shouldn't see any significant impact of inflationary costs, for 2022 and 2023.
In fact, I see, you know, still further opportunities for us to continue to improve, our cost structure base, in particular with, you know, improvement at a number of mine sites. You know, just give an example, you know, the Wahgnion that we acquired from Teranga, there was about 72 expatriates on site. We're now down to about 50 because we've got a very strong program of growing local talent. You know, taking out 25 expatriates, you know, that's, you know, $2 million-$3 million, you know, off the bottom line that you know, adding, and simply, you know, by, you know, growing local talents. This gives you a lot of leverage to absorb, you know, any small inflation on some of the other costs.
Overall, you know, feel, you know, pretty strong, you know, despite the inflationary theme around, you know, limited impact on our costs for, you know, 2022, 2023.
Okay. Just perhaps a question for yourself or Martino. When would you be providing guidance for 2022, 2023?
We usually do that in the third week of January, around the third week of January. Yeah.
All right. Okay, thank you very much.
Thank you.
Thank you. The next question is from the line of Yifang Bao from Amundi. Please go ahead.
Hi, management. I have two questions about the investment activities of the firm. The first one is, I read about the initial CapEx of two greenfield projects, and has the initial CapEx been deployed, or what's the timeline for the CapEx deployment?
Sure. The two projects that we're talking about are Fetekro, the greenfield Fetekro in Côte d'Ivoire and Sabodala-Massawa expansion in Senegal. Those two projects, we expect to complete the feasibility study by year-end, so the construction decision should occur in the beginning of Q1. No CapEx has been deployed, you know, so far on those two projects and are expected, you know, to start once construction decision is taken.
My second question is, since the company leverage is so low, what's the company's future strategy? I mean, will the management continue to look for M&A opportunities or what's your target for the maximum leverage?
Yeah. As part of our capital allocation strategy that we presented to the market during our London listing in June, back in June, the key message around you know, capital allocation was that we don't wanna go back to above 0.5x net debt to EBITDA in terms of leverage. We're currently sitting at about zero and we expect that you know, strong cash in Q4 will put us in a net cash position territory you know, by year end. And that's what we want to maintain you know, as long as possible. The objective is even during the construction period of those two projects in 2022, 2023, is not to go at any point over 0.5x net debt to EBITDA.
Okay. 1.5 times, right?
Point five. 0.5 .
0.5. Okay.
Yeah.
What's the covenant of the leverage?
The covenant is at 3x EBITDA. We've got, you know, ample room. It's really, I would say, a strategic decision of, you know, not leveraging, you know, more the business, ensuring that we are able to maintain a very strong discipline and more going towards accumulating a minimum net cash position of $250 million. That's really because, you know, we believe that whatever the gold price environment, we want to have a strong balance sheet to ensure that we are able to continue to deploy on exploration and on building new projects despite a lower gold price environment.
Okay. Thank you. That's all on my side.
Thank you very much.
Thank you. That will conclude today's Q&A session. I would now like to turn the call back to Martino De Ciccio for any additional or closing remarks.
Thank you everyone for joining our call today. That's all the time we have left, but we remain available for further questions by call or by email. Thank you.
That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.