Ladies and gentlemen, thank you for standing by, and welcome to Indeavour's Mining's Q4 and 4 Year Results Conference Call. At this time, all participants are in a listen only mode. After the management's presentation, there will be a question and answer Today's conference call is being recorded and a transcript of the call will be available on Indevo's website tomorrow. I would now like to hand the conference over to your management. Please go ahead.
Hi, everyone. I am Martino, Vice President Strategy and Investor Relations, and I'd like to welcome you to our 2020 full year results web to the Q4, which today we are hosting out of West Africa. On the call, I am joined by Sebastien, Mark and Patrick. We're also delighted to have our new CFO, Joanna Pearson on the line for her first results call. Today's call will follow our usual format, but will also include the additional reflections of how we became a senior gold producer, while trying to preempt your inevitable questions of what comes next.
We'll try to be as quick as possible to leave time for questions at the end. Before we start, please note our usual disclaimer. And now I'll hand it over to Sebastian, our CEO, to walk you through our journey so far.
Thank you, Martino, and hello, everyone. It is great to be speaking with you all again. We are very Excited to start 2021 because it marks a new phase in our journey. I and most of my team joined in early 2016, And we view the 1st phase pending 2016, 2019. During this period, we were highly focused on organic growth With the build in particular of Ity and Hounde and the real push on our exploration efforts.
In addition, we were focused on divesting lower quality assets. Last year, we were in cash harvest mode and sought to leverage the strong West African operating platform we built by consolidating Semapho and Terranga, both of which offered strong industry logic. We now have the portfolio we need to enter a new phase, which again will be focused on organic growth. The main difference between this phase and the first one is that previously we funded ourselves through debt. We are now at a stage where we can self fund our growth through cash flows, while also rewarding shareholders in the form of dividends and buybacks.
Another way to express this new phase, M and A is clearly off the table as we have now the geographical diversification and the right portfolio of assets required to continue to unlock value for the foreseeable future. I'm proud of how far we have come in a very short period of time, And I'd like to thank the wool team for their hard work and perseverance in getting us here. Turning to Slide 7. We are now one of the world's largest gold producers. And in fact, we are the largest gold producer in West Africa, Which is the world's 2nd largest gold producing region.
I'm confident that this will be a significant competitive advantage going forward. As you know, my motto has been since day 1, highly focused geographically in this highly prospective region And at the same time, diversified over multiple assets and countries. As you can see from the graph on the right here, We are one of the top gold producers globally with 1,400,000 to 1,500,000 ounces of production targeted this year. We are also positioned very well in terms of all in sustaining cost with guidance below $900 per ounce And also in terms of free cash flow yield, as you can see here in the bottom left graph. And finally, we recently paid our 1st dividend, corresponds to a yield of approximately 1.8% at current share prices, which we aim to increase going forward.
We are also seeking to supplement our dividend with the implementation of a buyback program as part of our continued focus on returns to shareholders. Turning now to Slide 8. I'm sure that you all recognize this chart, which graphically illustrates our portfolio priorities. As I mentioned earlier, we are very happy with the portfolio we have assembled, and we have been focused on getting assets into the bottom right box, Which is characterized by long mine lives and low cost. Assets that don't fit the criteria have been divested as shown with the white circles.
We now seek to continue to aggressively explore with a strong focus on the newly acquired asset to extend their mine lives to beyond 10 years. Moving to Slide 9. You can see how this repositioning of our portfolio translates. We now have strength Across asset life cycles, we have a strong portfolio of producing assets with and country diversification, Which generates sufficient cash flows to both reward shareholders and fund our development and exploration activities. We have a number of exciting near term growth projects and one of the highest quality greenfield exploration portfolio, which ensures both near term and long term growth.
This is why I mentioned earlier that I'm very happy with the portfolio we have assembled and have no more the need Turning to slide 10. As we enter a new phase for our business And growing stature, we will be even more guided by our responsibilities. We are busy working on a number of ESG initiatives, Which we hope to announce during next couple of quarters, including renewable energy opportunities, carbon emission reduction targets and biodiversity plans. This forms part of our implementation of the World Gold Council's Responsible Gold Mining Principles, which this year we will also be growing Alongside with the TCFD and SASB reporting frameworks. We very much see our work as a partnership with our host country and local communities, and we'll continue to ensure our activities support socioeconomic development through initiatives like EcoDev.
We see a real opportunity to grow EcoDev as an impactful investing model. Let me just give you a quick example of one of our EcoDev investments. The Mali Chi processing plant in Mali, which was commissioned last week. Mali is the world's 2nd largest producer of sheenote and accounts for approximately 20 of the global market. And yet Mali didn't have an industrial processing plant until EcoDev and a consortium of other investors founded by Medici.
This plant has now created 128 direct jobs, supports over 21,000 female sheenah growers and aims to benefit more than 120,000 women from around Mali. More importantly, It now enables Mali to progress along the value chain and become a manufacturer rather than just a supplier of road nuts. We choose this investment as a game changing investment on the value chain of the Chinat. Kalana in Mali is a big region of Chinat. By funding this industrial facility, we ensure that the women of the Kalana region will have a proper buyer of what they grow at the right price.
This is a tangible example of how we are able to live our purpose to produce gold in a way that provides lasting value to society. And turning now to Slide 11. This translates into a new vision for the company, which is to be a best in class gold producer, And our objective is to create a resilient business to reward our shareholders and to be a trusted partner in the communities where we operate. To ensure our business is resilient, we are continuing to focus on driving strong cash flow generation, While advancing our attractive projects and exploration and continuing to divest lower quality assets. For shareholders, we will sustain a healthy dividend yield, implement a share buyback program and obtain a premium London listing, Which we anticipate will lead to further demand for new investors.
And for our partners, we will increase the proportion of nationals in leadership roles, Enhance our climate and biodiversity strategies and accelerate socioeconomic development program. These elements is core to our purpose and our license to Turning to Slide 12. As I mentioned earlier, we're extremely excited about 2021 because it marks a new phase in our journey In which we will be focused on building and maintaining trusted partnerships with all our stakeholders, enhancing our resilient and sustainable business And rewarding new and existing shareholders. During 2021, now that we have integrated both the Simapo and Teranga assets, We intend to define a climate change strategy for the expanded group and incorporate climate targets into our business. We remain focused on reducing our emissions across the group and are currently exploring several options to incorporate solar projects into our Hounde mine and our Fetekro development project, among others.
Having successfully extended the mine lives to plus 10 years at 2 of our flagship assets, Hounde and Ity, last year, onboarding the Semapua and Teranga assets And divesting the noncore Agbaou mine, we are now focused on organically advancing projects within our project pipeline. With that in mind, this year, we focused on completing the Phase 1 expansions at the Sabodola Massawa mine, while simultaneously completing the DFS on the Phase 2 expansion. We will also be advancing the Fetekro and Kalana definitive feasibility study to completion in Q4 'twenty one and Q1 'twenty two, respectively. Exploration is an area where we have been very successful over the last 4 years, thanks to Patrick on the call and his team. And we remain on track to meet our 5 year exploration target this year.
Owing to our renewed focus on organic growth and our expanded portfolio, We've increased our exploration budget this year to focus our exploration efforts on the newly acquired assets and on promising greenfield prospects. In order to continue rewarding our existing shareholders and attracting new ones, we will follow-up on our maiden dividend of €60,000,000 That was paid on February 5 with the implementation of a share buyback program to be executed over the next 12 months. We believe this is an opportune time to initiate the program, having just completed the Teranga transaction, ahead of our proposed London listing, Before we move on to the second section and our results in more detail, we wanted to provide an update on our plans for a premium listing on the London Stock Exchange, which remains on track for June as we seek to broaden our appeal to a wider group of potential investors. We believe We have a strong proposition for investors in London. And as you can see with the left hand chart here, we have the potential to be the largest pure gold producing company 2.
We're targeting footsy index inclusion and expect significant indexation demand on the back of this. Moving now to Section 2 to discuss our record 4th quarter and full year results. Starting with safety on Slide 15, which is of the utmost importance to us, we continue to be well below the industry average. However, the 3 lost time injuries over the past 12 months are a reminder that we can never become complacent. I would like to take this opportunity to congratulate the Hounde team, which achieved 20,000,000 hours lost time free and Agbaou, which reached 10,000,000 hours lost time free.
This is a great effort by teams on-site, one we hope to improve upon going forward. On this next page, you can see our annual production trend. While the slide is a bit busy, I'd like to focus your attention on 2 key messages. The first point to note on this page is the bars in blue, which represent production from continuing operations compared to those shaded, which represent This clearly shows today we have a completely different portfolio to the one we started with when I joined in 2016 As we have executed on organic growth, disposals of our noncore assets and strategic acquisitions. Given these changes, we now expect to produce up to 1,500,000 ounces in 2021.
2nd, As shown with the reference points in brackets, we have consistently met our guidance over the past 8 years. And 2020 was no different. We are extremely pleased to have met the top end of our production guidance despite the challenges COVID has posed to the industry, our staff and our host countries. I think we've been very fortunate to date as a business. We haven't had to suspend any of our operations and our supply chain hasn't been negatively impacted either, Thanks largely due to our decision to refocus our procurement to the West African region back in 2019.
Most importantly, however, we have not lost any employees to COVID and through the strict measures we put in place early on, We've been able to contain it and keep our employees safe. Having said that, from a well-being perspective, I think all our staff have had moments when the lockdown has been tough and it's important that we recognize this and we put in place various programs to help them. Increasingly, as an industry, we are mindful that 0 harm isn't enough and just focused on safety at the mine site, But also means taking care of our employees' mental health too, which is why I'm particularly impressed with the team and the commitment they have shown to Endeavor And would like to thank them sincerely for their tremendous work over this exceptional year, by all means. As you can see on Slide 17, we are equally proud to have met our all in sustaining cost guidance for the last 8 years. In 2020, we reached the middle range of our guidance, despite the cost inflation seen with higher YLTs, which is, of course, linked to the gold price.
For 2021, costs are expected to come down to stand at below $900 per ounce. Moving to Slide 18. You can see the trend of our all in margin since 2014. More recently, our margin has increased by 2.5 times in 2020 compared to 2019. In 2020, the second half showed significantly stronger performance Then the first half, due to increased production, which I'll further explain on the next slide.
We've also been able to take advantage of the higher gold price environment following the expiry of the Goldcorp program at the end of June, we saw nearly half of our production capped at $1500 per ounce. Moving to our quarterly results on Slide 19. You can see that we had a strong increase in our operating performance In the latter half of twenty twenty, as we integrated Mana and Bumbu and ramped up production at Hounde with the addition of Kari Pump. Our production in Q4 increased by more than 100,000 ounces compared to Q3 to reach a record level, while All in sustaining costs saw a sharp decrease. On Slide 20, you can see how the operating performance translated Into strong financial performance.
Q4 saw our sustaining margins increased by 28% compared with Q3. This represents nearly the same as what we achieved in Q2 and Q3 combined. Moving a step further, you can see how these improvements translated to strong operating cash flow, especially in the second half of the year. Our Q4 operating cash flow before changes in working capital increased by $238,000,000 or 326% compared to the same quarter in the prior year. On Slide 22, you can see the evolution of our cash flow per share over the last 4 quarter, 5 quarters, hitting a new record in the 4th quarter.
This is arguably one of the most important metrics Given that the nominal cash flow is up in part due to the Semaphore acquisition. As you can see, We were keenly focused on transactions that were accretive, and we believe that looking at gross per share is key to generating attractive returns for shareholders. Remaining on the same subject of per share metrics, you can see on this next page That the adjusted EPS followed a similar trend, also hitting a record in Q4. When looking back to 12 months ago, our EPS Has more than tripled. Another metric we track is our return on capital employed.
And you see on page 24 that is quickly approaching our 20% target. On Page 25, we dive into a bit more detail on the buildup to our return on capital employed. It's important to note that our current 20 return on capital employed is being impacted by projects and exploration assets, which represent nearly onefour of our capital employed. Given that our projects have high IRRs, this capital employed is expected to yield benefits in the medium to long term. On the right of the page, you can see the returns by assets.
Both assets that we recently built, Ity and Hounde, are showing significant returns. Mana is also healthy at over 20%, and we expect Boungou to increase next year given the recent restart of mining operations. Karma has been waiting on the group metric, and as such, we have flagged that it has become noncore. I'll now hand it over to Joanna to run you through our net free cash flow buildup and balance sheet.
Thanks, Seb. On this page, we start with the all in margin, as Seb noted earlier, and work our way down to the free cash flow and cash inflow for the periods. Looking at the full year numbers, we generated an all in margin of 6 $42,000,000 which in turn resulted in a free cash flow of $476,000,000 which is a 12 fold increase over what was generated in 2019. Highlighting several of the more important line items which account for this increase, we note that we had significantly less growth CapEx, which is due to the ITIL build being finalized in early 2019. You also see that we had a working capital inflow.
This is mainly due to increased trade and other payables due to the inclusion of Mana and Boungou for the second half of the year a decrease in inventories due to the reduction of Golden Circuit at Karma and the decrease in inventories at Mana and Boungou in the second half of the year. The increase was partially offset by a decrease in non cash adjustments related to depreciation of the fair value adjustments on the PPA following the acquisition of this MFO assets. Tax payments increased due to higher taxes at Agbaou, which also had a withholding tax on dividends in the year and at Ity to do its production startup, While lower taxes were paid at Hounde since last year was impacted by installment payments for forward looking periods. The other operating cash flows include the realized loss on the gold collars in inflows related to short term forward sales. During the year, we also had acquisition costs from the Semapho and Taranga acquisitions, Significantly increased for the year, largely due to the significant cash that was acquired through the Semifo transaction as well as the proceeds from the sale of mining equipment.
Cash flows used in financing activities decreased significantly during the year due to repayments of debt that was acquired from this MFO transaction as well as the repayment of the revolving credit facility, which was drawn in the year. We also repaid the remaining outstanding financing obligations in Q4, reducing that value to nil at December 31. Overall, this has resulted in a cash inflow of $525,000,000 for the year.
Thank you, Joanna. What I find interesting is that we get a free cash flow yield of circa 20% You should divide the €476,000,000 of free cash flow by the average weighted shares outstanding for the year and today's share price. This broadly matches the consensus free cash flow yield for 2021.
Yes, that's correct, Sebastien. Now looking at Slide 27, we take a closer look at our cash position build up based on the free cash flow statement line items. We achieved a net cash position of $75,000,000 at the end of 2020, a net debt improvement of more than $600,000,000 compared with our 2019 year end. Cash from operating activities was nearly $750,000,000 in 2020, an increase of $450,000,000 from last year. We invested a total of $160,000,000 into the company's operations and had a cash flow outflow of $71,000,000 for financing activities.
At year end, we had a large cash position of $750,000,000 some of which was then used to refinancing the more expensive Taranga debt following the transaction close in the Q1 and to pay our first dividend. Martino, Slide 28, please. You can see how our balance sheet improved progressively since mid-twenty 19. We hit peak net debt of $660,000,000 following the completion of the Ity build in Q2 2019 and in the short period of time since Then we have achieved a net cash position of $75,000,000 This of course does not yet include the balance sheet of Teranga. I'm pleased to see that we went from a leverage ratio of nearly 3 times net debt to EBITDA and are now in a very strong financial position.
I'll now hand it back to Sebastien.
Thank you, Joanna. The continued improvement in our financial position has allowed us to take further steps to enhance returns for shareholders as shown on Slide 29. We announced a sustainable dividend of approximately $0.37 per share. This was paid in February. Following the payment of this first dividend, we expect to declare future dividends on a semiannual basis with the goal of maintaining similar payments Until we have reached our targeted net cash position of $250,000,000 I believe that it is important to build this Strong balance sheet buffer to be able to continue to pay a dividend during cycles.
Once we have reached this net cash position, which may be quickly based on current gold prices And the cash flow we are generating, we would be well positioned to increase the dividend. In order to supplement our shareholder return program, We announced today that we also intend to implement a buyback program. At current prices, we believe that such purchases will be value accretive to our shareholders On the EPS, cash flow per share and NAV basis, moreover, buybacks can represent an effective use of our capital And can deliver enhanced returns compared to other uses of capital on a risk adjusted basis, especially at our current share price. Through the buyback program, we can purchase up to 5% of issued and outstanding shares on market over the next 12 months. To facilitate this, we've entered into an automatic share purchase program with a Canadian broker.
What I like about the business and portfolio we've built is that we can now generate enough cash to have shareholder returns, While also being able to reinvest into the business in projects and exploration, it's not one or the other. I believe that we have one of the most attractive pipelines of projects, which position us well to keep growing. The most attractive is the Saba Dalla Massawa expansion, which was commenced, and we are currently working on Phase 1. Looking ahead, you might have seen the PFS results for both Sellecro and Kalana, which were published 2 weeks ago. For over 200,000 ounces per year, while Kalana is showing 150,000 ounces per year potentially.
Beyond return on capital employed, we are focused on showing returns across the business, and these are two good examples. We invested roughly €20,000,000 in exploration at Filicro, and it is already showing NPVs over €500,000,000 at a gold price of 1500 Well, Kalana was bought for roughly €120,000,000 and it is now showing an NPV of over €300,000,000 We believe that this is just the beginning. I would like to point out that the Fetekro PFS already looks a lot better than the Ity and Hounde's DFS, where we then continue to add answers. At pelicro, the study is based on only one deposit, while we have identified over a dozen other nearby targets. Given the potential of both assets, we are now progressing under DFS.
The goal for this year is to focus on cash flow, Build up the balance sheet and return capital to shareholders. In the meantime, we are building optionality in the portfolio with this project study. Lastly, I want to point out the low CapEx intensity of our projects compared to the free cash flow that the group is generating. A new Greenfield project has a CapEx of roughly $300,000,000 $350,000,000 spread over 18 months. This represents just a few quarters of net free cash flow that the group is generating based on gold price, particularly current gold price.
Looking now at exploration on Page 31. You can see how our program has progressed Since we laid out our 5 year exploration target in the second half of twenty sixteen, we have consistently added to our resource inventory at the drill bit with another 2 2,000,000 ounces added in 2020, excluding any acquired assets. And interesting as well to note that these ounces were found At less than $15 per ounce. Turning to Slide 32. You can see how our pro form a reserves and resources have evolved 2020, largely due to the acquisition of Semaphore and Taranga.
On the reserve side, we saw an organic addition at Hounde plus the inaugural reserve at Fetekro following completion of the PFS. Doing the same analysis on our resources, we can again an increase in resources at Hounde and Fetekro, while mine depletion explains the reduction at OTO mines. With the acquired assets, we again approximately Double our resource endowment from the start of last year. I'll now turn it to Patrick to walk you through the exploration program in more detail and then Marc to run you through the operations.
Thank you, Sebastien. Hello, everyone, on the call. As you can see on this slide, we are increasing again the overall exploration budget from €65,000,000 in 2020 $270,000,000 to $90,000,000 in 2021. This is really And challenge involving all of my teams, and I take the opportunity to thank the HR function and support led by Henri de Joux for their On commitment to help us in addressing it. Over the last 4 years, we have been spending in average roughly between 12 €15,000,000 per year on each ET and Hounde.
Now that we have reached our main objective of locking in At least 10 years of production at close to 250,000 ounces per year, we can reduce the spend to roughly €8,000,000 on each of them And to reallocate some of these budgets to the newly acquired mines with the goal indeed to of replicating exactly our success there. You see in the bottom pie chart that the largest focus outside of Greenfield, which remains important, We'll be on Sabodala, Massawa and Wahgnion when the rest of evenly spread across all the mines. We see overall significant exploration potential within our whole exploration portfolio, and we are really excited to publish and update 5 years exploration strategy later on this year. And now, Marc, over to you.
Thank you, Patrick, and hello to everyone. I trust that you're keeping safe and well and clocking up plenty of virtual Peloton mines. Starting on Slide 35. Our production bridge illustrates the performance for the full year for the pro form a 2020 business. Hyundai, Ity and Karma all showed improvements in production year on year, while Agbaou, which we recently sold, declined.
In addition, we added the Mana and Bougu assets in the second half of the year, which were strong contributors to our business. We saw good all in sustaining cost performance, particularly from Hounde, which was aided by higher grade ore from Kari Pump Nbungu, which reverted from processing of stockpiles to high grade open pit fee by the end of the year. Moving to Slide 36, I will start the review of our individual mining operations with Hounde. As you can see on the chart, production increased significantly in quarter 4 As we benefited from higher grades driven by the Oktog ore coming from Kari Pump, where mining began in the second half of last year. Credit goes to the team on-site for establishing this pit and ramping up production so rapidly.
All in sustaining costs decreased quarter on quarter mainly due to the significant reduction in the strip ratio, which more than offset higher unit costs and sustaining capital. Strong production and all in sustaining costs for the quarter topped off a very strong year at Hounde. Looking ahead to 2021, We expect performance to be broadly similar. The first half of the year will see ore from the higher grade Kari Pump pit blended with ore from Boray and Vindaloo Center. During this period, mining at Vindaloo Main will focus on waste stripping.
In the second half of the year, we expect to commence mining at Kari West, Which will contribute to higher process grades. Turning now to Ity on Slide 37. You can see that production has increased between quarter 3 and quarter 4, driven by increased processing volumes and higher grade contribution from Stage 2 of the Back Increased mining and processing volumes and a higher amount of fresh rock mined and processed, along with increased cyanide consumption due to the Bakkatu ore, resulted in higher mining and processing costs for the period. All in sustaining costs for the quarter was adversely affected by one off accounting adjustments from prior periods, Resulting in an increase of approximately $195 per ounce. Other important activities at Ity, which commenced in quarter 4, included The 3rd raise of the TSF, compensation of Flouleur for the La Plaque deposit and construction of the Old Weatherhall Road And the Cavalli River diversion to enable the next cutback for the Collins Hook pit.
Reviewing Ity's 2020 performance, You can see that production benefited from a full year of operation from the Ity CIL plant compared to only 3 quarters in 2019. Looking ahead, we're expecting strong performance from Ity in 2021 with higher production guidance at slightly higher all in sustaining costs than in 2020. Moving to Boungou in Burkina Faso on Slide 38. Open pit mining was successfully restarted in October, resulting in a strong Q4. We saw a significant production increase, thanks So the very high grade ore available on restart, which resulted in decreased all in sustaining costs.
Looking ahead to 2021, we expect production at Boungou at slightly higher all in sustaining costs due to the strip ratio increasing significantly in the West Pit to around the life of mine average for the deposit. Production will continue to ramp up in early 2021 following the commissioning of 2 large excavators and additional production drills, which will result in a high strip ratio in the first half of the year. The 2 year set rate is also planned and under construction. Moving on to Slide 39 and Mana. Quarter 4 production increased slightly due to the greater plant throughput, Which was offset by small declines in recovery rates and grades due to the completion of the higher grade Sohu open pit And greater reliance on feed from the lower recovery won't appear.
In terms of all in sustaining costs, we saw a decrease as a result of Lower open pit mining unit costs and lower sustaining capital spend. Looking at 2021, We expect a decrease in production for the full year following the completion of mining at Siggi pit last year and Wona North Stage pit early this year, Which will be offset by lower grades from Waines House Stage 2. Underground total water extraction is likely to remain fairly constant throughout the year With the proportion coming from higher grade stopes increasing steadily and proportionate reduction in lower grade development ore as the year progresses. Turning now to Karma on Slide 40. Production in quarter 4 increased from the previous quarter Following the end of the rainy season and increased staffing capability through both grades and recovery rates remained flat.
In terms of all in sustaining costs, these increased due to higher royalties, mining unit costs and inventory adjustments, partially offset by an increase in sales and lower processing and G and A unit costs. Full year production from Karma remained flat As higher stack tonnage was offset by lower grades and gold recovery rate. All in sustaining costs increased due to slightly higher mining unit costs Following the changeover to contract mining and increased agglomeration costs on account of the recovery characteristics of the GG1 ore. Looking ahead to 2021, we expect to focus mining activity at the Cow North and GG1 pits, Where the overall strip ratio is anticipated to increase slightly compared to last year. There will be less ore available for the heap leach compared to the Capacity of the stacker system and the 4th excavator and additional trucks will be mobilized to Karma in half 1 in order to increase overall oil production, Which will improve slightly in the second half of the year.
Turning to Slide 41 and the Sabodala Masala mine. I've been able to visit site on 3 occasions now over the past 6 months and have been very impressed with both the caliber of the team and quality of the operation. Since the acquisition of Masala, activity has rapidly moved in that direction with the construction of a 30 kilometer haul road and commencement of mining of the higher grade Sofia Pits. All mined is expected to be higher than in 2020 due to the transition of mining from the Sabodala lease to the Sofia Main and North Pits on the Masala Mining Permit. Plant throughput and recovery rates are expected to decrease slightly Due to an increased proportion of fresh ore from the Saphir pits, mill feed will be comprised of approximately 30% oxide and 70% fresh material.
The heap grade is expected to increase in half 2 this year with higher grades mined at the Sofia Pids. A TSF raise will be completed along with ongoing mining fleet replacement and rebuilds and continued establishment of infrastructure at Masal. The processing plant upgrades will be outlined in the following two slides. Moving to Slide 42. We are now embarking on a first phase of upgrades to the processing plant, which will be focused on debottlenecking the back end to increase the capacity to process The higher grade 3 milling Masala ore.
As part of this and going through which the number points in order, We are planning to add another Elektra winning cell to the gold room, larger carbon regeneration kiln to increase regeneration capacity, Additional acid wash and allusion columns to increase the total average capacity to 13 tons per day An additional leach tank to increase the leaching and CIL residence time for 32 hours and a gravity circuit to reduce the load on the downstream CIL circuit. We're also planning to convert 1 existing leach tank into a CIL tank to increase capacity. Procurement is largely complete with some packages already delivered to site. The civil engineering contractor has also mobilized And already commenced foreign concrete. Moving to Slide 43.
We provide some insights into Phase 2, during which we plan to add an additional processing circuit for the high grade refractory ore from the Massawa deposits. The DFS for this second phase is already underway with a focus on a number of optimization opportunities, and we expect this will be completed in quarter 4 of this year. Turning now to Slide 44 and an update on Wahgnion. Similar to Sabodala, I've had 3 visits to Wahgnion, Which has ramped up production very quickly to well above nameplate. A number of the team were transferred from Sabodala, bringing the good systems and work practices with them, Thereby, enabling a very neat and organized operation to be established.
We believe that the region is still largely underexplored The potential to further optimize the mining plan. Uhura was established to the Fekora satellite pits in quarter 4 2020 Along with the commencement of the resettlement plan, this will enable contract mining from there in parallel with own mining from the Nogbilly pit in 2021. For 2021, we expect the mine to produce between 100 and Sorry, 1,414,000, 155,000 ounces for the period of Endeavour ownership as plant throughput and gold recovery rates Are expected to decrease slightly due to the greater volumes of fresh ore. Construction of the second cell for the Tier set will also commence in 2021. I'll hand it back to Sebastien now.
Thank you.
Thank you, Marc. In conclusion, I'd like to acknowledge our Strong performance over recent years during which we have consistently met or exceeded both production and all in sustaining cost guidance. We are very pleased with both the portfolio we've built and our financial strength, which now position us to enter a new phase in the Endeavor story focused on shareholder returns. Moving to Slide 47. We are very excited about 'twenty one as we have many upcoming catalysts.
We are excited to show the Q1 metrics, inclusive of the Teranga assets for the first time, and I'd like again to welcome all the Teranga team that has joined Endeavour. In addition, we expect a steady stream of positive updates regarding our projects and exploration activities. On the corporate side, we will be hosting our Capital Markets Day in late Q2 ahead of our premium listing on the London Stock Exchange. I believe that we have an appealing investment proposition with strong cash flow and both near term and long term growth in addition to an attractive valuation, Healthy balance sheet and strong shareholder return focus. I'd like to thank our shareholders who have supported us during our evolution, and we look forward to rewarding them.
With that, I'd like to thank you all for dialing in and open the line up to questions and congratulate Joanna, our CFO and the finance team for closing her first Endeavour year end results smoothly despite our 2 major acquisitions. Thank you very
much. Thank you. Ladies and gentlemen, we will now begin the question and answer Please standby while we combine the Q and A queue. This will only take a few moments. And your first question comes from the line of Ovi Sabib from Scotiabank.
Please go ahead. Your line is open.
Thanks, operator. Congratulations, Sebastian and Endeavour team for a good quarter and year, and thanks for taking my questions. Sebastian, my first question is on the Taranga assets. Can you give us a little bit more color on How the integration is going with those assets, especially Sabodala Masawa? And then I'll just ask more questions on Maybe move on to Burkina for that.
Sure. Thank you, Extremely well and has been smooth. Thanks. I'd like to say, I mean, to the strong support from the executive The theme of Teranga, which has reported us, I mean, throughout between announcement to closing. I think that I said several We have a very similar culture in terms of operating model with Teranga and with a decentralized model where the GMs at mine sites have The right competencies, the right support to operate.
And therefore, we've been extremely happy with the 2 operations that we acquired. We currently have the 2 GMs which are in place and happy with them and their team. So I must say that it's been a very smooth integration so far. Our team has been progressively on the project side, Taking over the Sabodora Masawa extension, in particular on Phase 1, where we have a construction Which is our project team, which is on-site to start the Phase I expansion. And our team will be also taking over progressively on the Studies for the DFS for the Phase II.
So again, extremely pleased by the integration and also the quality Of the people at both Wahgnion, Sabodola and also in Dakar with as he is the country manager and his team.
Okay. And any comments on how the community as well as the government is kind of Expected you into the countries, especially Senegal?
No. I think that we had As you know, I go very often to West Africa. So I did come to Senegal the week before the closing. And I was able to meet in Dakar the Minister of Mine and the President of Senegal. And also, I did spend a lot of time with the local governor around the Sabodola Massawa mine and also the local chiefs.
They were extremely supportive. What was, I think, very important is to reassure them that Endeavour is not going to suddenly change the full framework that has been put in place because I have to say that the relationship on the ground has been extremely good between the Saba Dola Masawa team and the different stakeholders. So we're not We're there, I mean, to continue to maintain these strong relationships.
All right. Thanks for that. And just my next question is on just moving to Burkina Faso. In terms of Bongo, any updates You can provide in terms of the government participation on the security side on the road to Bongo?
Well, as you know, we try not to describe too openly, I mean, the security protocols that we have in place. But if you recall, I really said that in order to be able to restart mining at Boungou, we had several key criteria, which obviously are now in place. Otherwise, I wouldn't have authorized the restart of the mining at Boungou. The first one was a framework agreement with the government, ensuring that we would have The right support from the Army, Police and Jean Amory in securing some logistic corridors and also security around the mine site. The second one was to ensure that we would have an airstrip up and running so that we were able to fly in and out 100% of our staff from the country to site, which is the case today, 100% of our staff are flying in and out.
And the third one was to be able to bring a credible mining contractor, which we did with SSTP. We took over in the beginning of Q4. So Again, happy the way things have been progressing at Boungou and you saw the strong results that we got from Boungou in Q4 That impacted very positively our year end results.
Perfect. Thanks for that, Sebastien. And then just moving on to your organic pipeline. Clearly feels like Pedicro is Endeavor's next development project as it already kind of fits in your magic box. These studies expected by the end of the year, but is there anything you guys are waiting to see over the next 9 months That's going to be on in terms of exploration upside or any kind of scope of the project?
Any also any color that you can provide on permitting there as well?
No, exactly. I think that Clearly, on the study side, the objective is to come up with the DFS by year end. Patrick's team on the exploration side have been doing further drilling campaigns since End of Q4 and since the beginning of the year. So we hope that we'll be able to integrate some of the results That we would be expecting in June into the DFS, which would allow to continue to improve the quality of the projects from PFS So that would be the expectations. And on the permitting side, I'm currently in Algonquin Court in Cote d'Ivoire, and the objective is to We're expecting, I mean, to be granted the mining permit for Fetekro over the next few weeks.
So this will be a big milestone step as this should happen over the next few weeks. So extremely happy how things are progressing there. As you said, I think that Ferriero is starting to be what I would call an endeavor type project, which means over 200,000 ounce annual production for 10 years plus and with low all in sustaining cost that should be getting us with Strong IRRs in terms of returns. So, yes, very happy with the way this has been developed. I mentioned in my presentation, We spent so far $20,000,000 on this project and we have above $500,000,000 of NPV on this project at 1500.
So this is demonstrating how robust our exploration team can be in discovering strong assets.
Perfect. Sebastian, that's it from me and congrats again on a good quarter and a great year.
Thank you very much, Oveiz.
Our next question comes from the line of Don DiMarco from National Bank Finance. Please go ahead. Your line is open.
Hi. Thank you, operator, and congratulations to the team. I guess my first question is, You have this ATHENA initial resource pending. And I remember that the Taranga geologists were really excited about ATHENA. And I'm also looking at your budget for exploration in 2020.
We got 30% allocated for greenfield projects. Can you share what we can expect for the maiden resource and whether it's going to be a focused target for your greenfield exploration program in 2021.
Sure. Thank you, Don. Maybe Patrick, I mean, is on the line, so can give a bit of color on Afima. As we pointed out, I mean, the objective is To have some initial resources to come out in the coming few weeks based on the latest drilling campaign. As you said, it's something that the Taronga team has been very excited about.
We tend to be, I would say, Cautious simply because we want to see more drilling results in order to be able to assess the size of this target. But it is extremely encouraging and we'll obviously spend some money in 2021 on continuing to drill at Afema. Patrick, do you want to comment further on Afema?
Yes. Well, actually, the exploration program on Afima has been going on quite strongly in since actually the December. So right now, we are expecting we are receiving a lot of data and so on. So we'll take Some time to analyze all this and so on. I don't know exactly how much we'll be spending on APIMA this year, but Probably we'll be spending around $8,000,000 or a little bit maybe a little bit more as part of the resource.
The resource will come whenever they will come because we need to do some probably some additional in field drilling or reconnaissance and so on. But for us, at Endeavor, Afima is one attractive project like another one. We still have a lot of things to do, And we are doing it on Fetekro. We have been starting again working on another greenfield Cluster of license that we consolidated in the past named Tandaigela. And we are also going to start drilling In Guinea, where we have 5 exploration license, we like a lot just nearby Anglo at Sigiri.
So you see, yes, we have a significant effort of Greenfield this year. Afema is one of them, and we target, Hopefully, to publish the first updated resource on APHIMA sometime within the 2nd part of the semester. I Cannot give you exactly the time right now, but for sure it's one of the subjects that will be addressed this year.
Okay. Thanks. Appreciate that Patrick and Sebastian. Looking at the year end reserve statement, I see that at Sabodala, The reserves were basically kind of flat year over year, which implies that despite depletion of over 250,000 ounces, You managed to kind of maintain the level of reserves. So what drove this?
Was it exploration success or was the cutoff grade change? And maybe if you could comment on some of the your expectations for exploration at Sabodala in the year ahead?
So maybe, Marc, I mean, do you want to comment on the reserves and then Patrick give a few ideas on the exploration side?
Look, I guess, when it comes to the reserves at Sabodala, we are still doing a lot more drilling there. So there is Just a slight reduction, and we do expect that we'll be able to sort of offset a lot of that through the drilling programs that we've got Coming this year.
Patrick, on the exploration?
Yes. Again, on the exploration, What I can say that between Sabodala and Massawa for us, we are not going We spent a lot of money in exploration on Sabodala asset itself because it has been the subject of quite a lot of exploration in the past. On the contrary, we do believe that there is still a significant upside on Matawa, and that's where we are going Probably to spend the big majority of the $13,000,000 that we plan to spend on Massawa, Sabodala area With different type of targets, the main one for us and for me, which is very important, is to try to address as Many good quality oxide targets to try to fuel a little bit. I would say the Facility expansion on that, it is encompassed on Phase 1. And also to give some breath to the Time of decision making whether or not to how we want to proceed in the refractory stuff.
So this is going to be 1st year, very important, and that's why we want to be very aggressive on Matawo itself.
Okay, great. And maybe just Maybe one point
on to your specific questions on not seeing, I would say, the reserve going down despite the depletion. Technically, we've redone the Sabodola Massawa reserve at $1300 gold price, while Taronga used to donate at $1200 And this is to have all our operating assets done at the same level. So part of this flat slight increase It's due to this $1200,000,000 $700,000,000 change to be aligned with all the other operating assets we have.
Okay, great. And thank you for that. And maybe my final question then is, Well, M and A has been a common theme throughout 2020, even prior to that with the bid for sentiment. But Your messaging recently has been more about you're done with M and A. Is that the case?
And are you done with M and A just through the LSC listing or inclusion into the index process or what is your sort of your thoughts on M and A over the year ahead or beyond?
Sure. I think that as we said, M and A for me is a tool to get to the right portfolio. And we felt that in 2020, we had these those opportunities with Semaphoa acquisition and the Teranga acquisition to rebalance nicely our portfolio for the future. We have now the size 1,500,000 ounce yearly production. More importantly for me, we have this strong focus, geographical focus in West Africa.
But at the same time, we are now well diversified over several countries and several assets. So I do feel that we have now in hand all the right assets in our portfolio. And given the success that we've gone through in terms of exploration and the quality of the organic growth pipeline that we have, I don't see the use in the future for M and A. So this is why I've been insisting. There are some windows where M and A can be An attractive tool to get to the right portfolio.
I do think that we have now the right portfolio and that the future for Endeavour will be on the organic growth In West Africa.
Okay, great. Thank you for that. That's all for me, gentlemen.
Thank you, Don.
Your next question comes from the line of Anita Soni from CIBC World Markets. Please go ahead. Your line is
Good morning. This question, I'm not sure if Sebastian can answer it or maybe Joanna or Mark, I'm not sure, but I just wanted to go through the purchase price allocation calculation that's in the integrated MD and A and financial statement. So this is with respect to FEMFO. I see the mining interest went down by approximately a little over 10%. You have outlined your key assumptions that you haven't shown what they were previously on the preliminary number.
Can you just tell me what key change drove that 10% reduction. I guess I'm drilling in at the depletion expense lower than I was looking for substantially and there were some restatements for Q3 and Q4. And then the second part of that question would be, could we expect something similar once the Taranga acquisition closes? So not necessarily on 1st set of financials, but when would we expect to see the final purchase price allocation for that?
Sure. Joanna, you want to take this one?
Yes. Anita, happy to take this offline and we can provide more details. But just on an overall basis, the purchase The operations subsequent to the acquisition. On a mine by mine basis, overall, the valuations are relatively consistent with the preliminary valuation at Q3, there's not really any substantial differences. However, we did just reclassify that amount, the valuation difference Goodwill in Q4 rather than reflecting it in the mining interest, which we've done previously.
And I'm happy to discuss that with you more offline to provide a little bit more detail.
Okay. That's all right. So I guess I'm just trying to figure out why you had to move something from the mining interest The goodwill, in which one I can see these assumptions and I see obviously you've done the mine plan again. I'm just trying to understand which one is different from the original.
So Yes.
And we can take it offline, but essentially it's just the recognition of the difference from the deferred tax calculation, which is an accounting rule, which We reflected it in goodwill rather than the mining interest, but there's no real impact on the overall valuation of the mine assets themselves. So, but I'm happy to chat with you offline to provide some more detail.
There are different there are I can see that there's deferred tax of $24,000,000 I'm trying to drive So yes, let's take it offline. And the second part of the question was similarly on the Taranga transaction. Would that be with the audited financials or Will the Q1 financial statements, when this is all like when you guys put out the Q1 financials and this is closed, Will that reflect the true purchase price allocation or should we have to wait to the next set of audit and financials next year?
We'll be looking at the semapho purchase price allocation again in Q1 to reflect any changes in the Q1 statements. And then So we'll then work on that after that, but we will have a preliminary allocation in the Q1 statements in May.
Okay. Thank you.
Your next question comes from the line of Carey MacRury from Canaccord Genuity. Please go ahead. Your line is open.
Hey, good morning, everyone.
Just a question on
the Masawa Phase 2 study. Are there any significant changes you're expecting there relative to what Taranga had laid out in terms of the configuration? And secondly, Where would you see potential upside opportunities at Massawa?
Sure, Mark. I mean, you want to comment on this? Yes.
So there was a number of trade off studies that Taranga had Initiated that we are just going through the process of concluding, and there's certainly no surprises so far. And if anything, some of the trade off studies for the more just to confirm in case there was a thought that perhaps something wasn't being considered. So, so far, everything's I'm tracking quite well in terms of what Taranga had thought and certainly what
we're seeing. In the flow sheet, I think we are still looking at adding a gravity circuit, which should help increasing a bit the recovery. But beyond that, So far, I mean, no big changes.
And the other piece, we are there is more oxide. And Obviously, the exploration efforts for this year is very, very important to give us that flexibility as well.
[SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:] Just to properly size the BIOX plant.
Okay, great. And then maybe back on the project pipeline. Again, it looks like Petro is at the front of the line here. But looking at the other projects you've picked up from Sanofo and So you have FEMA and Golden Hill from Taranga. Which one of these would you say are more advanced than are there any timelines Are some of these at more of the front of the line than some of the other ones that potentially could come ahead of Kohana?
Well, I think that we're blessed with the size of that pipeline. So we'll go through the studies step by step. Obviously, we're not going to build Four projects in parallel and in our 2022, we'll probably be focused on the Phase 2 of Sabrina Masawa And probably Fetekro, although we'll wait for the final results of both the FS between Kalana and Fetekro. And in parallel, we are preparing the next projects. We'll have a go at looking at the potential integration of Golden Hill into Hounde.
So there will be a bit of drilling and met test later to assess this. I think Bantou is progressing well in terms of obviously size. We've got close to 2,300,000 ounces of inferred resources there. So, we'll continue to work on those subjects. And I think that As we mentioned earlier in the call, Afema is also an important one.
Yes, so we're progressing step by step each The key potential future projects that we have in the pipeline.
Great. Thank you very much. Your
next question comes from the line of Lawson Windes from Bank of Securities. Please go ahead. Your line is open.
Hi. Thank you, operator, and hello Sebastian and team.
Could I I'd like to
start with a question on your growth outlook. And maybe I'm sort of jumping ahead of your Capital Markets Day here. But if you look out 5 years and think about your production, do you See your objective as maintaining 1,500,000 ounces a year? Or do you see your objective As growing that production level.
Well, it's a fair question, and I think that I will respond to part During our Capital Day, I'm not driven by production size, and this is why we've been continuing to, On a regular basis divest what I would call non core assets. And if we wanted to be a 2,000,000 ounce gold producer, we would be by keeping the assets that we had Already in the pipeline in the existing portfolio. But for me, it's about maintaining consistency around the quality of those Assets with mine lives and with low all in sustaining cost. We clearly have the potential in the portfolio to continue to grow production going forward. So we're starting with a strong base with this 1,400,000, 1,500,000 ounce.
And obviously, given The strength of the pipeline, we have the ability to continue to grow beyond.
Great. And just touching on something you mentioned there about adjusting the portfolio. You mentioned that Karma is now non core. Just curious, has the sale process started? And can you provide any commentary on how that has perhaps gone?
The good thing in most of the assets that we've divested in the past is that we didn't necessarily have to go through a dedicated process Because we were in fact approached by each time by several candidates buyers. So, I think that We've made enough clear to the market that Karma was non core. We've been approached already by several potential buyers. We are reviewing the different options and we know that if we are able to meet The criteria that we want will proceed. If not, we're happy, I mean, to continue to enjoy the cash flow from Karma.
Yes, that makes sense. And then just also on Karma, I mean, I imagine that the stream on Karma is Partly what plays into the lower return, have there been any discussions around how that stream looks going forward or Perhaps the need to adjust it for any buyer to get comfortable with the price that you guys are happy with?
So the Karma stream is in fact decreasing significantly in March this year. So we at the end of the big cost because we'll now go below 5%. So it's pretty it's becoming, I would say, attractive for a buyer, I mean, to step in now. I think the returns, as you pointed out, is partly the stream, but it also, if you recall, I mean significant CapEx that we had to put on the plant to get the plant right from the initial TRUGOL design. So overall, this had an impact on the capital allocated to Karma.
Yes, good point And well taken. And then maybe just on the capital return, I think the buyback makes a lot of sense. And certainly, it relates to your comments that on a risk adjusted basis, it's a very competitive return. And I guess my question would be, Why not maximize the buyback? I think with the TSX, you can go up to 10% on an annualized basis.
It's interesting to see that when you start, I mean, to generate good cash have a good balance sheet that you suddenly have requests for very high dividend yield and or and sometimes end Very high buybacks. So I think we're just trying to be realistic on what we can do. This is a 12 month program, which means that we can renew those programs going forward, and we can always request an increase in the program next year. But we need also to be realistic to ensure that we can properly allocate the cash flow that we will be generating both to exploration, our future projects And maintain this healthy dividend yield that we've set up and at the same time being opportunistic on the buyback Depending on where our share price is. And clearly, there is the sense that now is a good time for a buyback even where our share price stands.
And it would be fair for myself and other investors or investors rather to assume that at a 5% level that buyback is likely to be fully used
Over the next 12 months?
I think it's difficult to comment because it will depend on how The share price, gold price, we've evolved over the next 9 months. But the reason why we said 5% is because we believe that it's realistic. We've seen in Canada looking at all the precedents, there's been, I think, a lot of companies announcing buyback at 5% or 10% and in reality, Executing only 20% of their envelope. So I think that we wanted to be realistic and make sure that Market expectations are around commitments that we do and that we make Rather than putting high numbers and getting people disappointed because we're not executing along those lines. So 5% is a good start, is realistic.
And clearly now is a good opportunity in terms of timing and we'll see how it works After the listing, we would be expecting strong demand as part of the listing going forward. So we'll see how the second half of the year will work For further buybacks.
Yes, that makes a lot of sense. And now just Continuing on capital returns, with the dividend, the release mentioned that the LaMancha Transaction will close in Q1. So mathematically, you will have obtained and ceded your $250,000,000 net cash position once that closes. So, with that just on the horizon, I imagine you've thought quite a bit about Future dividend levels, can you provide us any guidance in terms of what gold price you may be using in terms of thinking about setting a dividend, first of all. And then as a follow-up to that, When you think about a future dividend and a potentially higher dividend, do you think about setting a dividend at a level Can be maintained over the long term?
Or could we expect some variability in the dividend?
Sure. So I think there are a few elements in your comment. First, we're expecting, I mean, soon to receive The $200,000,000 investment from La Mancha as part of the closing of the Teranga transaction. But recall So that we're taking over a bit more than $370,000,000 I think $1,000,000 of debt from Teranga. So this has an impact, I mean, compared to the year end results balance sheet, which is impacting it.
But given the strong cash flow that we are And depending on gold price, we aim to get quickly to this $250,000,000 net cash position. As part of the listing, what we said is that and this will be highlighted in our Capital Day, we are looking at a capital allocation strategy that we are discussing with the Board. And I think that this capital allocation strategy will give better visibility on How we intend going forward to allocate the company's cash flow Between organic growth and instruments for returning value to shareholders, including potential More directed, I would say, policies around free cash flow, which is distributed Percentage of free cash flow distributed to shareholders and so on. Gold price is obviously a big driver into that. But the good thing with the quality of the portfolio that we have is that whether it's 1400, 1500 or above, we're still generating Pretty strong cash flow that gives us confidence and this is why we came out at the end of Q3 with the dividend policy gives us confidence that Whatever the goal cycle, we should be able to maintain a healthy return policy to shareholders And at the same time, be able to finance our organic growth.
And you'd expect that return policy to be like a stable dividend. So once set, it would likely remain at that level or higher going forward?
Yes, exactly. I mean, what we said is we want to keep a minimum of 1.6% yield. That was based On the share price, when we issued the first dividend payment, I think it's equivalent to about 1.8% dividend yield today at current share price. So the intention is to have a minimum going forward, a dividend yield, which is minimum equivalent to this one And growing progressively as we pile up cash on the balance sheet.
Great. And maybe just one more for me on the pipeline. And thank you for that chart on all the projects, Greenfields through to the existing assets, it's very helpful to visualize what you have in the pipeline, which of course is very robust. Nabanga is one that jumps out for me just because it's as it exists today, it is rather small and its size hasn't grown much In several years now, I'm just curious, do you still look at that asset as core? And what do you see as potential exploration upside there?
Sure. I think the reality around Nabanga is that Semaphore hasn't done any work around Nabanga for the last 18 months. From a security standpoint, Nbanga is not in the easiest part of Burkina. So this is why it hasn't been a priority, a priority with Boungou, but we hope to be able to include the manga In our exploration program, probably in the second half of the year or in 2022. And as you said, I mean, it's starting with pretty Tractive numbers because you've got 800,000 ounce at 7 grams per ton plus.
So it's an interesting Starting point, I mean, to look at an asset. So Patrick and his team needs now to be able to complete Another set of drilling program to see the potential of this asset.
Yes. No, I can't disagree. Those are certainly very exciting grades. Okay. That's it for me.
Thank you so much for taking the question, Sebastien, and I look forward to our next discussion.
Great. Thank you, Lawson.
Your next question comes from the line of Mark Bensley from Chesapeake. Please go ahead. Your line is open.
Good afternoon, Sebastian, and the rest of the team. First of all, let me congratulate you on a fantastic year for your shareholders. Delighted with what you've achieved. I do have a number of questions, if I may. So first of all, In 2016, you published a 5 year exploration plan, which is coming to completion this year.
Will you be publishing another similar plan? And if so, roughly when?
That's a good question for Patrick that has been a bit on the grill On this, we said that, obviously, with all the changes in the portfolio and as we are getting into the last year of our first exploration strategic plan. It would be nice, I mean, to have this second exploration strategic plan that will include The new assets from Semaphore and Tiranga. So I would expect that to be probably as part Q3, so probably in September or October, we will have a way to present probably the conclusion of our first exploration strategy plan. And this will give time between now and September, October for Patrick's team to assess All the different opportunities in both the Semaphore and the Teranga portfolio. Patrick, is there more you want to say on this?
No, no. Thank you, Sebastien. No, basically, we consider more or less now that we have completed a little bit ahead of Schedule what we wanted to do, what on what was basically Back in 2016, the exploration portfolio of Endeavor, on this portfolio, we have been delivering almost 8,500,000 ounces. So we are very close to your target and the remaining year should be okay. Right now, I'm working with my team To integrating all the upside potential we were seeing on the semaphore upside and The main activity right now is dedicated to incorporating Teranga stuff.
So when you look at that, as Sebastien said, we plan to publish or to speak either at end of 1st semester or during Q3 the new strategic exploration plan That will be built with more or less the same approach than the one I used 4 years ago when I built the former exploration strategic plan.
Very good. There's certainly a plethora of targets to prioritize now. Next question relates to the recently published feasibility studies for Fetekro and KALANA. Looking at those, Fetekro looks pretty much ready to go subject to the DFS. Kalana, on the other hand, I noticed that production would drop off after the 1st few years.
Would you anticipate needing to do more exploration, prove More resources at Kalana before potentially moving ahead with that project?
Exactly. Marc, that's the objective. I mean, we always we're interested by Kalana in particular because of the Expectivity of Kalana. There is a pretty large land package, in particular, on all the south part, which hasn't been drilled yet. Obviously, Patrick's team have been quite busy in focusing over the last few years, I would say, in expanding mine lives at existing core assets.
Now that Ferrico seems to be on track to become, I would say, an Endeavour type project, this will probably give more focus Down the road for a bit more Kalana exploration drilling campaigns. In particular, once we will have a sense That pelletro will go first because we're not going to launch 3 construction in parallel. That means that we'll have a bit more time on Kalana to start increasing the resources there And hopefully get it closer to what I would call an endeavor type project with above 200,000 ounce annual production. So clearly, the intention is to be able to progressively increase some exploration there.
Good. Thank you. Next question relates to financing. Now we're in a net cash position. The convertible bond was a very good instrument for the company when it was issued, but it seems to me that maybe it's now outlived its usefulness.
Can it be redeemed early? And if so, is that something that the board is thinking about doing?
Yes, completely, Marc. I mean, we said when we came out with this convertible bond that This was a way to finance our construction phase and that on the back of the cash flow expected from The assets once built and commissioned, we would be in a position to analyze a trade off And in particular, having the flexibility to buy back the bond. So we have the capacity in our convert to buy back The bond and to basically redeem in cash, shares or cash and shares. We objectively, I I must say that we looked as part of the buyback that we announced today, we looked also at alternative scenarios in buying back Some of the converts, clearly, in terms of returns, buying back shares had much, much bigger returns. So this is why we came out this morning with the share buyback approach.
But we still have the flexibility going forward to Call the bond when we want. So I think this is something that we're monitoring and this is part of our capital allocation strategy. As a shareholder myself, if I can avoid the dilution of the converts, great, As we continue to grow the strength of our balance sheet. So I fully agree with you, and that's on the radar for us To monitor over the coming months is
Good. Thank you. I mean, a couple of concerns I have about the bond at the moment Firstly, that the conversion option that's embedded in it tends to distort earnings as the share price moves a little bit And also that some of the bondholders seem to be operating delta hedging strategies, which could affect the share price. So it would be nice in my eyes to get rid of it to remove those distorting factors. But As you say, if you estimate that rebuying shares back is more shareholder value additive, then so be it.
Thank you. Then penultimate question. With the Phase 1 Expansion of Sabodala Masawa. We're adding 900,000 sorry, 90,000 ounces of production. Would that mean that from 2022 onwards, we would expect production from that asset in the region of 400,000 ounces?
Is that correct?
So the expansion of I mean, the Phase 1, which is debottlenecking the back end of the CIL, Allow us to basically increase on a quarterly basis from 75,000 to 90,000 ounces in terms of production. So we'll see obviously the full impact of this growth in 2022 given that we're expecting to have this To have this Phase 1 commission across Q3 with a full impact in Q4. And therefore, Q4 will be A good proxy for what to expect for 2022. If we look at 90,000 ounce The quarter that would leave Saba Dola Masahua probably around 360,000 to 370,000 homes for 2022.
Thank you. And then my final question is on an ESG matter, which is Most of the operations are open pit, which is rather an ugly mining method. What are your thoughts and rough plans on rehabilitation of the open pits when mined out?
Would you comment?
Generally, I mean, one of the things that It can be an interesting question whereby it does make sense if you can to backfill pits, whereas There is also a reluctance and in particular sometimes from government to backfill pits on the basis that you could be sterilizing the future resource. So we make sure if we are going to do a backfill strategy that we really have done the work like a $2,000 gold price. So We do have examples. At Agbaou, we backfilled some pits even at 1 year on some of the tiny little pits backfilled. So If it makes sense, we will always look at back selling pits because that is the nicest way to sort of put back what you've done.
But obviously, Doing that, you would never do it as a deliberate strategy because you're rehandling the entire the waste twice. It is a tricky one. We generally do rehabilitate waste dumps. We generally put buns around pits and allow pits to Fill up with water. They do become good water sources for those areas.
One thing that I've done in Western Australia, which we haven't necessarily looked at yet here, is being able to put tailings into pits. But that Really looks at depends on water tables and many other things. So anything that you can utilize to sort of fill back up that volume And not just more land mass is obviously something that we do look at and we can probably Look at a few further options as time progresses.
Very good. Thank you very much for all those answers. That's very useful.
That will conclude today's Q and A session. I would now like to turn the call back to Martina De Ciccio for any additional or closing remarks.
As there are no more questions, we'll now finish the call. I will, of course, remain available to address any additional questions offline. Have a good day, and stay safe.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.