So thank you for coming to our 1st Toronto Investor Day. Here with me today are Sebastian, our CEO Patrick Bousay, our Head of Exploration Peter Olsen, Head of Projects, Vincent Benoit, CFO and, Morgan Carol, legal counsel. So just to explain the format before we start, We'll do a first session on West Africa insights. So to be able to share with you a few insights on why we're so keen on West Africa. Then Sebastian will do a CEO introduction and update on our strategy followed by an in-depth view on our 4 key pillars, which are operational excellence, project development, exploration, and balance sheet management.
In terms of Q And A, I'll prompt at certain times during the presentation sessions for Q And A So please hold off till then. You would have all received some big heavy bags. In there, there's 2 presentations. Rest assured, we'll only present 1, so just four hundred pages, but we'll go quick. I on there, for those more electronically savvy, there's also USB key with, the presentation on it.
You also have a few press releases. Our fact sheet and our first sustainability report. In terms of logistics, last FYI, 1:55 pm precisely, you all get a text message, not from Endeavor, but from the Canadian government, apparently. They're testing mobile security. So just turn off your, go on and turn off your Wi Fi for that.
So with that, thank you again for coming, and I'll pass the word to Sebastian.
Thank you So thank you for joining. I know that, the market has not been great, so it's good to see that there's still some believers in, in the gold space. In particular, in Africa. So with the team, we decided that, you know, we need to embark into, a new story. And, the best way was probably to present it today to everyone, instead of, you know, continuing with end of the mining, gonna now go for end of the cannabis.
So you can see that next to our minds, we're not trying to grow cannabis. And I will basically start telling you, stories about Sorry. Just one back. Why in fact, West Africa is a great area to grow cannabis? Just so that the multiples and maybe the quant funds and the passive funds will just catch up cannabis and the multiples will just go high.
Share price up 25% tomorrow morning, and we are all happy. Is that good? Excellent. Right. More seriously, I've been asked several times probably given the operations that we have across West Africa to give a bit more visibility on why West Africa and why we believe that West Africa is a from Iceland in terms of discovery.
And also a nice environment to operate. And given that, my dear friend, Mac Bristow, is now moving to Toronto, and, and leaving Africa, probably take care of more important issues across the world, particularly in Nevada and in Toronto. I thought that, you know, I would start talking a bit more about West Africa. So why West Africa? The first thing is when we just, go back one sec on where we are operating, you see that Since day 1, we've been trying to present ourselves are highly focused in Africa.
So we're really targeting West Africa, not the whole continent, and also at the same time, diversified over several countries. So we don't want to be a single asset in a single country. We don't want to be multiple asset into one country. We want to be highly focused in West Africa but diversified through multiple assets in multiple countries. And that's what we're doing today, and this is where we want to continue to grow.
Now in terms of, west Africa, just need to recognize sometimes that, west Africa right now is one of the largest gold production area. And if you look at the top gold producers, you know, by countries or regions, you can see that, you know, China is the biggest one. 2nd is Australia and Russia, and the third one is West Africa. And what's interesting when you talk to PM about, you know, where do you want to invest, you know, if you want to invest in bold equities, you know, a lot of them will tell you, well, you know, I probably can't invest in China. It's not easy.
Probably difficult to invest in, Russian assets. And therefore, the 2 biggest regions are obviously Australia and West Africa. And this is why I strongly believe that, anyone that is looking at the gold space has to look at West Africa. 81 Percent West African gross production over the last 15 years and the 4th largest gold producing region but probably the second one after Australia, if you put apart China and, Russia. The second interesting stuff is to look at, more importantly, where is the money in exploration going?
And why I like to look at where the exploration money is going is because you need to anticipate the trend and to have a look forward of where is the production going to come from? The production is going to come from the areas where we've been investing over the last few years. So where are the areas that companies have been really investing in exploration And when you look at just last year, for example, $385,000,000 exploration budget was spent in West Africa, which is the 3rd largest investment area for exploration after Canada and Australia. And over the last 10 years, it's $5,000,000,000 that has been spent last 10 years spent in West Africa. And out of those $385,000,000 that were spent last year, about more than 10% was spent by Endeavour.
We have a $40,000,000 to $45,000,000 exploration budget across West Africa. And you can see that represents more than 10% the total exploration budgets of all mining companies in the gold space in West Africa. The second interesting criteria is to look also that In terms of capital intensity, we are spending exploration companies and mining companies we are spending as much in exploration than in the U. S. But when you look at the land space, it's clearly 5 times less than the U.
S. So we are here on the territory, which is 5 times smaller than the US and where we're spending more than in the US. And in fact, We see that, the West African exploration is catching up quickly. It's just recently that we've seen a peak in the exploration investment into that region. And this is why also we're very attracted by it.
The other aspect, which is, interesting is why companies invest in, West Africa is because of the success, success in exploration, And if you look at over the last 10 years, you basically see that West African has been the most successful in exploration discoveries with 79,000,000 ounces of MNI discovered, fire ahead of other countries. So it's been the number one discovery region globally, for the last 10 years. And that's probably explained why people want to invest in exploration in that region. And in particular, when you look at also, because it's a quite recent area of exploration investment. It's also why you are discovering much higher quality answers So if you take just resources we've discovered over the last 24 months are above 2 grams per ton, mostly oxide, not refractories, and we're not talking about low grade.
So this is why also it makes this area so attractive. Now what are we looking for in West Africa? And that's, you know, for someone like me, which is not a geologist, I need sometimes Patrick, you know, to me a bit more, lessons on, why do you want to spend time on Cote d'Ivoire and Burkina Faso and why not on, Sierra Leon, for example, where there might be some, interesting stuff. Well, the reason is, you know, simply because what you want to target is these green spaces, which is the Birmian Winston Belt. This is where your chance to discover large deposit and bold is important.
And what you see, and that's interesting, and I've been saying that more and more over the last 3 years, what's interesting is when you look at the rate of discovery over the past, most of the big discoveries were over the last 30 years in Mali, and in Ghana. But look at Mali and Ghana size in terms of Greenstone Belt. It's pretty small compared to Cote d'Ivoire and Burkina Faso. So why? Why simply because you need to go back to geopolitical environment?
And for mezily, close to 20 years, you know, Kojiwa and Borkina Faso, where in a complex environment, And you would have to be very brave to go to exploration, in Cote d'ivoire and in Burkina Faso. While Ghana and Mali were much more stable, So in fact, all the first exploration waves were done in Mali and in Ghana. But when you look at Burkina Fas and Cote d'Ivoire, you see that more than 2 third, in fact, of the Greenstone Belt is lying over there. So this is the promised lands, and this is the area where you need to focus your exploration strategy. So confirming and looking at, you know, in percentage, when you look at the Bohemian Winston Belt, you see that about, yeah, 60%.
So close to 2 third of the Greenstone Bet lies in those 2 countries, Cote d'Ivoire and Burkina Faso. While at the same time, you see that Borkina Faso and, Kojiwa represent only a quarter of the total production. So you see the discrepancy between the 2. This is where you have the most opportunities, and this is where you had less discoveries in the past. But this is linked to the fact that because of the geopolitical environment, people didn't invested there.
Now if we look at expenditures and exploration investment over 2017, you see that close to 50% of the operation budget in West Africa has been now redirected to those 2 countries. $190,000,000 spent in exploration in Burkina Faso and Cote d'Ivoire. And what's interesting, obviously, for us, is that with a budget of $40,000,000 to $45,000,000, you see that Endeavor represent close to 25% of the total exploration budget in those Now looking at also why endeavor has been specifically focusing on French, West Africa. And I can tell you it's not just because, I'm French. It's not just because potentially we would find better French wines there.
And cheaper than in, Anglo part of Africa. It's also because, as we said, looking at where is the Greensdon Belt, clearly Cotegua, Burkina Faso and Mali, but more importantly, all those countries that we're targeting are part of the same economic zone, which sometimes people, you know, didn't see. They are part of the same economic zone. So What does it mean? It means that you have common central banks for 8 of those countries.
You have a common currency. Which is completely attached to the euro, which gives you, I mean, stability. You have also fiscal and monetary policies that tend to be aligned through the guidance of IMF and other, you know, world institutions. But because they are part of this economic zone, they need to be more and more in line. Which in fact gives you more and more stability in that regions compared to a single country that would be outside of a common economic zone.
I'm seeing a good example is what we've seen 50 years ago with the European zone. Clearly has been giving stability to the area just because progressively having the same currency and aligning progressively fiscal terms has given stability. And this is what the French West African countries through this economic zone have been doing. And this is why we believe there is probably stronger stability around those countries than in the rest of Africa. And you see that in fact, you know, also through the, taxes and royalties and, and the different mining codes.
What we've been saying and experiencing over the last few years is basically mining codes that yes, are evolving, but are evolving progressively in the same direction. And I think we shouldn't be afraid about announcement that we hear from time to time from one of those countries that they want to change a bit the mining code. They're not changing radically, I mean, the mining codes. What we see is that they've set up initially very attractive mining codes because they had to attract mining companies And as the country develops, they're trying to align progressively those mining code with their other countries around them, but also with the rest of the world. And when you look again at, you know, corporate tax, money, royalties, you know, for those countries and compare to other large regions, I mean they're pretty much aligned.
The other thing which gives us also comfort is because these countries are under supervision of IMF and the likes, they can't go crazy. I mean, they can't start doing crazy things. And again, coming back to this economic zone, because they are part of this economic zone, they need to respect also all the key instruments and some barriers that has been built as part of their membership into this economic zone. Stable political environment, yes, I do believe that, those countries, and then particularly the 3 that we've gone through, have a stable political environment, whether it's, you know, borkina Fasoque, mali, I mean, mali, we just had recently some new presidential election went well. President was, you know, re elected.
He has, you know, 2 terms. So this will be second and final term. Bookina Faso, yes, we had, for the first time, back in 2015, the first democratic election, with basically, a key change in government, where the previous president who was in power for 30 years, you know, was thrown away by the streets. And I think that, you know, recently, the country has shown its ability to maintain this path through democratic elections. And Cote d'Ivoire has been highly successful also in putting 2 consecutive terms with the same president, which has given strong stability to the area.
When you go back to GDP growth, I mean, last year, GDP growth for Cote d'Ivoire has been 7.8%. But, the previous years, they were above 9%. Which was the fastest growing country in Africa. So putting overall a pretty strong, stable environment over there. So what do we see differently from the rest of the world or from CNN news.
You know, when we're talking with investors, you know, what are we seeing differently? Well, I think that, you know, what we tend to repeat, and, in particular in the U. S, with U. S. Investors is the fact that, Africa is not one country.
Africa is 57 countries. And, you know, sometimes when you have something happening somewhere in Tanzania, know, down in the continent, doesn't mean that what's happening here is something which is happening on the other side of the continent. It a bit like, you know, what I look at, what's happening in Venezuela. Oh, must be the same in Canada. Come on.
It's just, just not the case. Yes. I mean, some of those countries went through those difficulties over the last 50 years. So it's not like they have a track record of you know, going smoothly, like, you know, Canada and the US. But, you know, things are changing, and it's not because at some point, you have some countries behaving wrongly that all the countries are behaving the same way.
And I think we see that more and more. The other thing that we see is and I don't want to point fingers is the fact that, some of our peers had some difficulties in some countries. And it's not because some of them had failures that we are failing. I think we're showing a few of us, having dinner with Clive yesterday. Few of us are having good success in West Africa, and it's not because some are failing that, all the companies be thrown away and they are all behaving the same and they are all failing.
No. I mean, it's not the case. And, and I think we need to advocate more and more the fact that there are some very strong success in West Africa and that those are probably the companies that, investors should look at. And we'll try to show during the, 7 hours 12 24 slides that, this company is one of them. Security has been, you know, obviously, a recurrent you know, subject, that we've been, you know, addressing and on which we had, we had questions.
I think that One of the benefits of being focused across different countries in this region is, we have the size with our multiple operations to have a strong security team. It's not because we need to have armed guards, you know, behind each of us. It's just because in those countries, you can face sometimes some difficulties and you need to be prepared for it. And I think, again, that some companies knows well how to operate in those environments. So, we're not afraid about security for our people and for our assets.
And in fact, when you look back at, you know, what are the biggest threats, you know, for investors when we talk about security issues in, in West Africa? Usually, the first one that comes up is, a coup or dramatic political change. This is not any more the flavor of the day in West Africa, I can tell you. In Burkina Faso after the 1st democratic election, you know, one general tried to do a coup 2 weeks after the election, it lasted 1 week. And the reason for that is the French army came in and said, guys, we don't play anymore with this.
This country needs to go on the democracy pass, and therefore after 1 week, the coup was over, and the president was brought back. So things that we've seen in the past, and particularly in that region in West Africa, I don't think will come, you know, not saying it's not going to come ever again, But I can tell you that over the next few years, I don't see this coming back because there is a strong political will both at the key states but also from the population itself that they don't want to see that anymore. And I think the fact that Campari in Burkina Faso was thrown away, you know, by his own people, is a good sign that people don't want that. The second thing is, in our terrorist attack That's the other security issue that, we've been questioned around. What can we say on terrorist attacks?
Well, what I can say is that when you look at, you know, what terrorists are looking for is to destabilize governments, not looking at destabilizing mining companies. And if you look at the history, in a particular over the last 5, 7 years, they haven't attacked any of our operations. And that's for different reason. The first one is if terrorist wants to gain popular with the population and with the communities. If they start by killing the goods, it's not gonna work because there are communities their life is mostly about the mining operations, the subcontractors, and all the life, which is around the mines.
So if you start attacking one of the mines, I can tell you the community is not going to be very happy. So the terrorists will try to gain support to expand in terms of political will in those countries, they know that that's not the target for them. The target for them is the government itself, So it's really attacking armed forces, armed arms, soldiers, because they want to destabilize the government. But then when I look at, you know, what's been happening, I think we had one terrorist attack in Cote d'Ivoire, We had 2 in Mali. When I mentioned Mali is Bamako And South of Bamako.
Obviously, you've got a lot of terrorist attacks in the north part, which is, you know, an area where no one's going, no one is operating there. And if you look at Burkina Faso, which has been lately, probably a subject of questioning and fear, there was about 5 attacks over the last 12 months. Those five attacks were spread over the country, and sometimes I asked myself Where do I feel more comfortable in terms of security? Is it in London? Is it in the U S?
Or is it in booking a vessel? Well, think about it. I live in London. I have kids going to school. We had a forty risk attack over the last 18 months, just in London.
Where do I feel safe? On our sites, in booking A Festo or in London? I mean, it's a key question. At least in booking A Festo, we usually know what they are targeting. In London.
We don't know. Look at what's happening, I mean, in the US. So I think we need to overcome also and put into perspective what security issues we're talking about. The second aspect, which has improved significantly also, is the presence of foreign armed forces and very strong ones. Obviously, the French government has sent a lot of troops in the area, both in malle and Niger, but more recently, there was an agreement to station armed forces, French armed troops in Burkina Faso.
And, you know, the Bookina Faso government is not spreading the news over, but I can tell you that there has been a lot of success since the French troops have been there, in taking away a lot of territory sales. The other aspects is the US also are sending more and more troops We know that Canadians are sending also some supports there. So there is a willingness across the international communities bring the right support So why are we, you know, so bullish and, just to recap and, about West Africa, I would say again, 1st, because it's the 1st, 4th largest gold producing region globally. And the second one was investable region, after Australia second, because it's the 3rd global exploration budget for 2017, and it's a continuous trend So if you look at where people are investing their money for exploration, this is where you will see the next big mines to come out. So West Africa is a key one.
And it's the 1st discovery region globally over the last 10 years. So yes, it's an interesting region, and this is why we're focusing so much on that region. So what is Endeavour doing there? Obviously, we're not the only mining company operating in West Africa, but what is probably unique about us, you know, compared to some of the names that is listed there is the fact that we focused only in West Africa. Some will see that as a positive or a negative.
We see that and we view that and we'll show you why from an operational standpoint that this is a positive. And secondly, across multiple assets, but also across multiple countries. And this is probably why it's so unique, you know, with endeavor to have this geographically focused, but at the same time, spread over multiple mines and multiple countries. And if you remember what I said about Borkina Faso and, Cote d'Ivoire in terms of, potential. If I can move to the next slide.
No? Yeah? Just remember that Borkina Fasoque, are the 2 most highly prospective countries in West Africa. And these are 2 Countries where we have leading position. In booking FSO will be this year, the 2nd, probably, 2nd largest gold producer after, not gold.
And in Cote d'Ivoire, we are the largest gold producer with Ity and Agbaou. So clearly, some key key assets in key areas for the future
questions. Just put a question on
West Africa or Countries or How do we grow cannabis over there? How much water consumption?
Okay, Michael.
Sebastian, are you able to expand on the French army forces and their commitment in a little bit more detail in terms of what you understand, support that might be there as needed.
Well, first, in terms of, in order to anticipate what was, in particular happened in booking a vessel, we've been strengthening our own team. So, we hired 12 months ago as head of security for for the region, for Endeavour, we have in France, what we call the, secret service called de Jesus, And within the Secret Service Group, you have one specific department, which is the ones which are turned over, active operations. And this department is led by 4 guys we hired one of them that over the last 20 years, have been operating, mainly in Africa. So it's now George Devon is now heading our security in the region for the last 12 months and has been helping us progressively to strengthen our overall security group, but more importantly, given his background to ensure that we keep strong ties with the French intel, all the French embassies and being able to be ahead in terms of overall information. And because he's a military also by background, he has strong contacts with all the French troops which are stationed in the area.
So we know a bit what they're doing, France has committed a significant number of troops. The number has not been disclosed. Initially, they were mainly through the back end force deployed in Northsmeli, and that was, back 4 years ago, when they had to intervene, to stop the, terrorists and the rebels, you know, coming from the North smelly and trying to get up to Bamako, I think it was a successful operation. But they've been maintaining all the troops over there. And since then, they've been expanding also the troops in other neighborhood countries in particular in Niger and now in Burkina Faso.
So what we see is the fact that they've brought a lot of drones, planes, to increase, in fact, the intel in the area and being able to bring also much more support to all the local countries. So basically it's through, you know, training programs, in order to build the right environment for them to start stabilize their own country. The other one which has been interesting is to see the U. S. Government starting to invest also significantly over there.
Because following the Libyan collapse, there's been a lot of fear that all the arms dealing that were based in Libya will spread over the rest of West Africa. So that's why France has been going there, and that's why the U. S. Have committed also troops, not really officially, but which are already stationed in Mali in Niger in particular. Last time I went to Niger where I'm still a advisor to the president of Niger.
You know, I saw that a big building on the construction and I asked the guys, who's building such a big, big stuff. And they said, what is the new U. S. Embassy? Say, what, New York's embassy, but it's huge.
Said, yes, that they have a lot of troops. So, yeah, those are two countries which have been, you know, putting a lot of efforts there in order to ensure the stability of the region is maintained, not because the region is about to collapse, but just to make sure that the impact of the Libyan collapse doesn't spread over the rest of West Africa.
We'll, we'll take our next question Okay. Perfect. So we'll try to stay on schedule into our next presentation, which is operational excellence. Sorry. Do you turn around?
Still me, Martino, or, someone asked me again? Okay. Okay. Just wanted to come back on a quick, you know, our 3 year turnaround story as we are approaching towards 2019. And, if we recall, Don't know which one works, this one.
Yes. So going back to, when I joined endeavor back in the end of 2015, we set an ambitious strategic plan for 3 years with the objective of where we want to be by 2019, where we want to have, you know, an average all in sustaining cost below 800. 10 year plus mine life and production around 800,000 ounce. The objective was not a specific number on production, but just say, okay, we're a strong mid tier gold producer, we're not a junior company. But the key there was really to move down the all in sustaining cost and to increase the mine life and the visibility.
And the reason for that is because we truly, I truly believe that, to create a sustainable business, you need to be able to address in terms of capital requirements the following allocations. You need to generate enough cash flow to be able to allocate to both your CapEx, whether sustaining and non sustaining, to exploration, to prepare for the future, to fund your growth. If you need to build your new mines, but also you need to reward your shareholders through dividends. I know that there are some debates around whether mining companies and overall whether in this space, we should be paying dividends. I strongly believe that we should be paying dividends because today we want to be seen as dividends or buybacks can be debates around that.
We want to be seen as a company like any other sectors It's not like we are a gold company or we are a resource company. And therefore, we can keep spending, the cash that we generate back into exploration and into CapEx. We need to demonstrate that our return on capital employed and also the return for investors are there. And therefore, you need to generate enough cash flow so that you can properly allocate to those 4 items, which means that as long as you don't have a structure, they structure that is able to generate sufficient cash flow all the time, you're going to scratch your head saying, okay. Where am I going to allocate that?
I can't address the 4 of them, so I need to sacrifice some of them. Realities that shareholders have usually been the ones sacrificed, or if you generate even less cash flow than that, exploration for the future has been sacrificed. So what you want is to ensure that you have the right asset base that would generate sufficient cash flow so that you don't have to compromise on one of those 4. And that's the only reason why you will sustain your business. And clearly, when we joined and I joined Endeavor, the objective was $9.22 all in sustaining to high.
In a gold price, which is highly volatile gold price environment, you need to ensure that even if it goes to $1000, you'll be able to continue to generate cash flow. So below 800 for me is key. Life of mine, life of mine, life of mine life, sorry, mine life is important because you want visibility. 4 years visibility I mean, who would invest in a business that has 4 years of visibility? We all know that if we have 4 years, you know, that the next year, you're going to have to think about closures or selling the assets.
So no one's going to bet on your company for the long term. If they know that you have to close the mine in 3 years' time and prepare the plants, or sell the assets. So you need at least 10 years mine life to give visibility to it. And production, I said, it's not production for the sake of production, I think you just need to be in the mid tier. You don't want to be a to me announce, you know, producer because then you need to renew to me announce every year.
And being able to renew 2,000,000 ounces of depletion. It's at least 2,000,000 ounces of reserves. And we're looking at, you know, Patrick, finding 2,000,000 ounces of reserves every year. And, you know, Patrick's going to find this year, 2,000,000 ounces of indicated resources that you know, might turn in 1,600,000 ounces of reserves, but, 2,000,000 ounces of reserves, that's tough. That's not easy.
So, you don't want to be in that space. You want to be in the space of 800 and above. It's good, but not too big. So in order to address, just on the previous slide, Thank you. And I don't know if we can fix this one.
Sean, can you try and fix this one? Thanks. So what have we been working in terms of, how to do this, this turnaround? Well, we've been trying to address, in those 3, 4 pillars The first one is operational excellence, and I think it's important to, keep delivering on our promises guidance, meeting guidance, saying that over the last 3 years, quarter after quarter, we've been delivering our guidance, project development, and that's something that, you know, Peter will comment on. And I was, you know, very impressed when I joined in the very finding a highly skilled construction team that Peter is heading today.
And, I think they've demonstrated their capacity to build on time, on budget. And a lot of time, in fact, ahead of schedule, our minds, they started with Enzema, then they built Agbaou just completed Hounde last year and now in the phase of nearly done with ity, which is already 2 months ahead of schedule. And that should be pouring 1st gold pour at the beginning of Q2. The 3rd lever is exploration. It's not just about building mines, but also it's about preparing the future.
And I'm very fortunate to have Patrick and his team, too, that, you know, Patrick has been supporting me for the last 10 years in our different ventures. And this one has been probably the most exciting over the last 3 years and probably also one of the most successful in terms of potential for discovering nuances. We're having a lot of fun around red wines, good red wines, French wines, And we've been delivering. I mean, so far 4,200,000 ounces on our exploration strategic plan, just in 28 months, another discovery cost in average of below $13 per ounce. So yes, I mean, we're getting there progressively.
And the last one with, Vincent and Genore has been, working also on the balance sheet and the portfolio. Being able to acknowledge that some assets are not for us and being able to have, you know, no string attached, no emotion. I don't have any emotions with minds. Can have motion with a good burgundy wind, but not with a mine. So if the mine doesn't serve its purpose, which is generating good cash, then it's not for me and not for the team.
And I don't want the team spending time on this mine because I want them to spend time on the ones we are generating our cash progressively the balance sheet from a highly leveraged company to, again, a leveraged company, but that's because we've been investing close to a $1,000,000,000 in building up our flagships. And now we will be starting generating strong cash flow. If I can have the next yeah. Thanks. Sorry.
So operational excellence, I'm not going to come quarter after quarter. And I think that, you know, Martino has been doing a good job in trying to give to the market relevant guidance and, to all our friends, which are covering us, which is sometimes not easy, even on a 30 basis. But, the team and all the efforts that has been put on the operation has allowed us so far over the last 3 years to deliver on our guidance. And if we look in particular at 2018, as we said at the end of the Q3 quarter, we are on track to deliver the high end of the guidance on production for this year and the low end in all in sustaining costs for this year. Had a question yesterday on, you know, what about, you know, quant funds and passive funds?
I said, yes, we need to take care of it. And I think that, you know, back in Q2, we had, you know, an EPS miss by about 0.001. While all the other targets and in particular, you know, production or in sustaining cash flow were a bit, and we were down, I think, close to 10%. So, yes, we need to take care of that. Also, we also, and I'm sure you'll acknowledge that, managing EPS on a quarterly basis, not easy for the team.
And, Martino and Vincent are scratching their heads every quarter to make sure that we're not forgetting something that, you know, we have a clear understanding of what the impact is going to be on the EPS. So yes, we need to be more cautious. We need to anticipate that. We got the lesson. But at the same time, we don't fall want to fall into traps.
So at the end of Q3, if, you know, just before the press release, we said, okay, what do we do with the Confluence? Oh, easy. Increase guidance by 1%. But you've got the word, increase guidance. I'm sure your stock will be up 15%.
We said, no, we don't want to enter into those games, you know, with serious people. So let's continue to do things seriously. And hopefully, the market investors will catch up, you know, seriously. Project Development, and, there is a big sections that Peder will go through after, but I think I'll just highlight the fact that we've been focusing on the right projects. And, when you look at the track record of this company over the last 4 years, Agbaou, which was the one previously built.
Agbaou had a payback of 2 years. 2 years. I mean, it's good in West Africa when you're able to build mines on time, on budget and with the 2 year payback. I mean, do you have a lot of countries and a lot of projects that gives that? Not that much.
Yes. So West Africa is a good environment to build mines, and I think we've been demonstrating, you know, mine after mine that we can build in this environment on time, on budget, and successful mines. Hounde was the latest. And when you look at the key elements around Hounde, yes, it's a very good assets, and this is why we've been focusing $320,000,000 CapEx on that asset. And when you look at the, operation cash flow of that month this year, yeah, we're probably trending to 2 years, two and a half years, you know, pay back on Hounde.
So yes, it's an iterative mine. And when you look at, what we continue to discover around? Yes. I think we were right, you know, to invest in that one. Ity, ity will be the same.
No reason to change we'll be keeping the same team and the next one after ity will be also with the same team. So overall, when you look at what we've been building and in particular, the last 2 months, Yes, very attractive. And we're trying to be more and more disciplined on what we are interested in. So if you look, you know, from Agbaou to Ichi, Yes, we took for Ity with the DFS, a new key metric at $1000 Ity CIL project as a 20% IRR. Since familiar to someone else, he's now in Toronto.
So, but yes, we are able to find and to build projects that have the same type of features And that's what we want to continue to maintain. As we build progressively the right portfolio, we want to continue to be more and more discipline on what are the assets that we want to focus on. Exploration. I mentioned this level earlier and Patrick will be doing 264 slides presentation just after on exploration. We've been trying to be innovative on exploration, not saying that there is no innovation in exploration, but in managing exploration.
And that's what I like with Patrick is we like to say that everyone in the company needs to bring accountability. And accountability is across the group, is not just for operations to deliver their guidance or their budgets, production, all in sustaining cash flow KPIs. It's not about the project team being accountable in delivering their projects on time and on budget, but it's also exploration being accountable on How much are you going to spend on exploration? How much answers I'm going to get? I don't want to check which is a free lunch, you know, for exploration to go and drill anywhere, and we'll see whether they are successful or not.
Doesn't work. And Patrick gets it. He's the one that build a plan. So he agrees on the fact that, yes, because we believe that we have highly prospective grounds, And I explained earlier why in West Africa and why in particular our tenements we believe are highly perspective. And therefore, yes, with the board, we agreed that We were ready to commit $35,000,000 to $40,000,000 a year in exploration, again, more than 10% of the whole exploration in the region, But the reason for that is because we believe that Patrick and his team are able to deliver 10,000,000 to 15,000,000 ounces of indicated resources over this 5 year.
So yes, it's a big commitment. It's not like any junior company saying, please give us some money and we'll see whether we're able to find something. No. We're investing and we will discover. And even more than that, we've been trying to say, okay, this is where we're going to discover.
And where we're going to discover has been mainly, obviously, on our 2 flagships, 2 third of the discoveries are expecting to come from Hounde and Ity. And if you look at the recent track record, I mean, we've basically been able to discover about 4,200,000 ounce in just 28 months since we launched that exploration strategy. So yes, we're on track to deliver this target of 10,000,000 to 15,000,000 ounces of indicators resources. And I'm highly confident and Patrick will demonstrate why we should be confident on their ability to deliver so. Thank you, Patrick, again, for the 1,000,000 ounce at Kari Pump.
This one is a big one, and I know that ity is the next big announcement. I didn't say anything. Now unlock exploration value, and I think that, we try to do also a few case studies, you know, how are we going step by step? You know, it's obviously easy when you fund a 10,000,000 ounce deposit, and you don't have to scratch your eggs. But, you know, it's not every day that you find a 10,000,000 ounce 1, I think we'll probably find one in West Africa in our portfolio.
Had a bet with Patrick, but we believe that in the next 5 years, we might find one of those big monsters. But, you know, meanwhile, we need to find more answers And what's interesting is to look at what we've been doing at Ity and at Hounde. And if you look at the history of, ity, You know, when we came up with, you know, and that's the white, you know, bars, not the brown one, is basically was our first feasibility study around Ity CIL. So at that time, we were looking at the 3,000,000 tonnes CIL plant. Then we spent $15,000,000 in 2015, in 20 17.
We added 1,000,000 ounces of reserves. We then updated the feasibility study and went from 3,000,000 tons to 1,000,000 tons. The NPV increased by $300,000,000 from $400,000,000 to 700 and this made basically a 20 times return on our exploration expenditure. And that's what we like to see And that's why, you know, we are so bullish on, in particular, those 2 flagships. And I think that, you know, when we said initially, when we set our strategic plan that what we want is to have Hounde and Ity showing by 2019 that those two projects are in fact mines that we'll be producing in average 250,000 ounce each for at least 10 years.
Which means that on top of this 1,000,000 ounce that was discovered in 2016, 2017, we're still expecting to find more to continue to bring this life of mine plan And for that, you know, you probably heard about our Le Plaque discovery, this year, which has been small and growing and growing. And in Q1, probably end of Q1, we'll be releasing our numbers for Le Plaque, and we believe that Le Plaque as the other targets that we continue to drill on will bring those ounces that we're requiring to see and demonstrate that ity CIL is a 10 year mine life at 250,000 ounce, and the grade of La Plaque, 2.8 grams per tonne. So yes, we continue to discover answers and high quality answers. An interesting case study is also in our Hounde If you recall my presentation back 2 years ago, I said, look, Hounde is a good project. This is why we're building it.
And by the way, yes, after year 5, you see a drop in production and increasing cost And that's because Vindaloo, where 90% of the reserves of the project lies, you know, the grade in Vindaloo is decreasing. And therefore production going down and costs going up. But we said since day 1, Hounde has the potential to bring much more in exploration and to bring up and optimize the life of mine plan in order again to demonstrate that Hounde will be a 250,000 ounce at least producer for the next 10 years. And I think that what the team has achieved in 2018, drilling 150,000 meters at Kari Pump, and discovering 1,000,000 ounces of indicated resources, again, at 2.8 grams per ton, while the average grade of Hounde today is 2.1 and 50% of that being into oxide, while 80% of our reserves today are in fresh, just demonstrate that Hounde has the potential beat these assets that we've been staying over the last 2 years. And, next year, and Patrick will show it.
We will continue to drill carri pump extensions because we see it's open, all across, in particular, North And West. And we have also Kari and Kari West. And therefore, we'll be investing again 150,000 meters of drilling in that area because we believe that there is another million ounce there. And suddenly, you'd see that, yes, The life of mine plan that we showed initially is going towards 250,000 on plus for the next 10 years. But we're not just investing in exploration on our brownfield and on just those 2 key projects because, 250,000 homes at Hounde, 250,000 owned, that's, ity, that's 500,000 homes.
But, you know, we want to produce at least 100,000 ounce or 1,000,000 ounce. So we need to prepare also the future and bring the next projects. And this is why we've been investing in parallel in exploration in Gainesville exploration. And you saw our discovery for, you know, Fetekro, again, in Cote d'Ivoire, remember Cote d'Ivoire, high potential discoveries. So Fetek Ho, very interesting one.
It's just the beginning. How many meters did we drill yesterday, this year? 32,000 meters drilled only, 800,000 ounce. And what we're looking at Okay. I won't do the subtitles.
But, again, very interesting, you know, 2.25 grams per tonne. So it's attractive, looking good. We need to work and, you know, it will go step by step. Let's not rush. But, yes, we're working also in the future into other targets than just Hounde and Ity.
Now, this has, and Patrick will explain, but, as I mentioned, Since we launched this ambitious exploration strategy, we are now at 4,200,000 ounce after 28 months of this plan. And it's 42% and the team is highly confident that, yes, we should be reaching this ambitious target of 10,000,000 to 15,000,000 ounces indicated resources over our 5 year program. Patrick, confident? Yeah. Big numbers.
I agree, but we are you big. Portfolio management, as I mentioned, I would have loved, you know, to be appointed CEO of a company that had, you know, 5 tier 1 assets and therefore generating strong cash flow and just being focused on doing a bit of green field, doing a bit of cost optimization and that's it, you know, for the next 20 years. That's not the challenge I took. The challenge I took is taking a company with an average of 4, 5 years mine life, close to a $1000 all in sustaining. And therefore, it takes a bit of time to bring it to the right portfolio.
I think we're getting there. As I said, no string attached and no emotion to mines. So we sold UGA in 2016. And you all now hopefully be familiar with our magic box. And the fact that we want our assets into this magic box above 10 years of mine life, below 800,000,000 dollars, $850,000,000 all in sustaining.
So all the ones that doesn't fit should be out. No time to spend on those assets. And we've been biased for that. I mean, there are junior companies or they are, you know, mid check companies operating at $1000 all in sustaining, which are happy to operate minds at $1000. So that's fine.
They're prepared to pay the price. I mean, I'm happy, you know, in terms of capital allocation that I'll be providing my shareholders with return on capital employed much higher by focusing on those assets. So we sold UGA, we sold in Zima, Tabakoto, we announced the signing of the sale of Tabakoto to the BCM group beginning of September. We've been waiting for the waiver from the government of Mali that we got last week. From the minister of mine and minister of finance.
So we're now free to close. And therefore, we should be closing very soon and before the end of the quarter, the sale of Tabakoto. And focusing on our key assets and in particular Hounde and Ity. And the next one, which is Kalana, that will be presenting in the next, in the next slides. So yes, I'm proud to say that, you know, thanks to the big efforts from all the team, we've been working on track to deliver our key strategic objective for 2019.
We should be below 800 all in sustaining. If you look at lower end guidance even for this year, we should be significantly below 800 already this year. 10 year plus mine life, we're demonstrating progressively with announcements from, from Patrick that, you know, our minds are getting to 10 years plus life of mine. And we're getting to this 700 900,000 ounce annual production. But it's not all about 2019.
It's about preparing for future and making sure that we have the right pipeline to sustain, you know, those objectives. And this is why in terms of exploration. We've been preparing progressively the next targets. So exploration targets that we move from greenfield to potentially feasibility study, construction, and then back into, you know, operation. And once, you know, some of those mines, you know, will not be performing as we would like, then the exit is on the right.
And we'll be selling those assets, and moving to the next one. So in conclusion, for this part, I would simply say that, yes, we're progressing well and we are well on track to deliver our strategic plan and doing the completing turnaround of Endeavour. When we started back in the end of 2015, we had limited visibility on the long term upside for the group, we had Tier 1, Tier 2, you know, project assets, but with no financing capacities to develop them. And we basically had, you know, high cost and short mine life operations. We have now a pipeline of key targets that will help us to prepare the future We still have strong targets for projects and optimization going on to make those projects successful for the future.
And 2 flagship assets with Hounde and Ity. So yes, we're on track and we're pretty happy with this portfolio. So our strategic objectives are getting there, making sure that our all in sustaining are below 8 10 years mine life. And again, this is just to make sure that we generate enough cash flow to allocate to the 4 key items, sustaining, non sustaining CapEx is 1. Exploration is 2.
3rd is to fund our growth with project. More importantly, start paying dividends for our shareholders. These are started to translate, obviously, also in our market cap and growing from junior company to a mid tier company, not yet a senior company, but, with Patrick discovering a Tier 1 asset soon, maybe we'll move up to the senior one. And partake. And obviously, we need to look at, our share price performance We had a good rerating and a good share price performance over the last 3 years since we, we took over Endeavor.
Obviously significantly at the beginning, a bit less recently, and can tell you that, team has been a bit annoyed, as we feel that we've been delivering aggressively on all the items, but, we stick with the fundamentals. The fundamentals are there, and, we strongly believe that, the next wave of rerating will be in 2019, in particular, with some new discoveries, but also with Ity CIL into production. Which is, again, beginning of Q2 and the strong cash flow, you know, from both Hounde and Ity starting to come out, you know, into the balance sheet. So this is probably it for me. Just, you know, conclude by saying, yes, we've been investing a lot over the last 3 years.
Close to $1,000,000,000 invested to bring our 2 flagship into production, in particular Hounde and Ity, but also with a strong project optionality, which is there, and still a lot of exploration upside. So starting in 2019, There's no revolution or no, you know, I'm not gonna buy Goldcorp or a new mount. No, no, I promise. I'm not gonna buy also, you know, high cost companies. We're just going to continue to be highly disciplined.
You know, you know, and for the ones that have been following us, you know, have from time to time discussions with companies, but we are highly disciplined. We didn't do Acacia and we're happy with this. So, we're not like starving or dining for doing a transaction. We don't need to. And this is why we'll continue to focus in particular in 2019 on return on capital employed and making sure that we make the right trade offs in terms of capital allocation.
Thank you. Thank you Sebastian. We'll now turn it to some questions.
No, it was clear. It was clear. Thanks.
I would have a couple of questions for you. 1, if you look at the expiration success at Agbaou, really haven't had a lot of ounces there. It looks like it's a short mine life. Costs are going higher. Does Agbaou potentially move out of the Magic Box?
It's a good point. We, we know that Agbaou at some point we'll probably move out of the portfolio. I mean, it's not for the short term. We've got, in particular, for the next 3, 4 years, we've got a good plan there. So we're happy, I mean, to stick with these assets.
Agbaou has been, you know, a high success or endeavor. When you look at, how much ounces was produced there, you know, we're twice above the reserve case in the feasibility study. So we've been very happy. It's clear that it's been a bit the left child on the side over the last 2 years because, you know, the team has been focusing in particular in exploration a lot on, you know, bringing the right answers for the Ity feasibility study and then for Hounde, and now spending a lot of time on Kalana. It's not like, we don't like Agbaou.
We see less potential in discoveries at Agbaou than the other assets, but we're working on Agbaou and Pat has been, you know, and his team doing some work. We see some potential in particular on the underground side at Agbaou that we need to continue to assess. So, it's not anymore at flagship assets. It was 3 years ago. Now it's Hounde and Ity, but it's still a good asset.
I mean, generating good cash, and and we're happy to have it. But, you're right. I mean, one day Agbaou, unless we, we find, you know, significant things over there. We'll probably come out of our portfolio like any of the other assets.
Yes. Thanks.
Sorry, Michael. You had another question?
Yes. I was just going to, you have a very large a strategic shareholder, that's been openly talking about M And A in West Africa and recently invested 30% in Golden Star How do you manage the fact that you have 1 large shareholder actively pursuing M and A with yourselves now Golden Star in West Africa? Is there a Is there a gentleman's agreement out there, or is it, how are you going to sort of play that, that game? And just, it's an interesting dynamic because I was on standing, the money was going to go to South America or Central Asia, but to see it end up in West Africa does show that there's a little bit of competition now.
Are we on record? Yeah. I need to be cautious. Okay. Okay.
So So about my main shareholder, a very good friend, very nice. We're having a lot of success. I think he's very proud and very happy with his investments. Whether it's been in evolution, in endeavor, and now going to, to Golden Star. I think we mentioned it, but, discipline around M and A, that's what we're doing, and that's what we told our main shareholder.
So, you know, there has been some, you know, the gift salaries, has been always very ambitious in whatever businesses he's been in. He was the 6 largest mobile operator worldwide. He has ambition for us in the gold space and in particular in Africa. So he want us to continue to grow. But at the same time, he understands that we need to grow not to be the biggest, but to be the best.
And I think this is, you know, a disciplined approach that he understands, and this is why La Mancha went for Golden Star not endeavor. We said, as endeavor, we're not interested by Golden Star, not because we believe that Golden Star is not, you know, a good assets. There might be an investment case for that, and La Mancha had 1, but it was not the investment case for Endeavour. Again, when you look back at, you know, at Magic Box, Golden Star doesn't fit into that Magic Box. So we have some clear kitayas on what we are interested in.
If there are some assets that would meet this criteria, we'll look into it. If not, then it's not for us. And I think that, you know, our main shareholder, you know, totally support that. And, this is why, you know, he decided to make this move you know, on Golden Star, you know, through his own vehicle rather than doing it through, through Endeavour. Nothing controversial, I saw.
Yes, Sebastian, on the portfolio management, the magic box, seems
to be a
little bit less emphasis on the number of mine. So I think in the past, you guys stressed 6 to 8 as the optimal number. What are you guys thinking right now as the ideal number of mines to manage?
I still think that 6, 7 mines is, is the maximum. So it doesn't mean we need to, to go to 6, 7, it means that I wouldn't go beyond 6, 7, 9, seems to be the magic number I saw that AngloGold also is looking at 7 mines. So I think we are realistic about what we can manage, you know, as a team, compared to others, because you want the right attention, I mean, to those minds. We currently have, you know, 4 mines now that Tabakoto is, is nearly out, building another one, you know, with Kalena at some point. So that's overall 5 mines.
And I think that, 4 to 6 mines is good. What we need to ensure is that those 4 to 6 mines are in a well spread over different countries. Again, for me, it's important. I don't want 5 mines in Burkina Faso. I don't want 5 mines you know, in Cote d'Ivoire, I wanna make sure that we have, you know, those mines spread over several countries.
So on top of saying, you know, multiple mines up to 6, 7 mines. I said multiple countries, in particular, 3 countries or more.
Okay. And maybe just briefly, Is there a bit of a, reticence to invest in underground mines per se, or do you have the skill set for open code or underground?
No. I mean, you know, the group has been operating, you know, Tabakoto Tabakoto Minor. So, we have the skills, whether the best underground operators, obviously, I wouldn't state that, but we're not afraid of and you find right competencies when you need it. So, you know, open feet on the ground, it's clear that, it's open pit mines mainly today because it's brand new mines. So, and we've been able to focus on, somehow good grade, you know, shallow open pit mines, which is even easier than looking at underground mines.
But if tomorrow, either we need to go to underground on one of our operations, or if we feel that there is something attractive, you know, as an underground projects or underground mining company to buy, you know, we look into it, for sure. It's, at the end of the day, it's all about returns and, what we can generate out of it. Thank you.
Sebastian, just on Kari Pump. Obviously, great discovery. You guys have done a good job improving resources there. You're at 1,000,000 ounces, and obviously, like you showed on the graph that production profile start falling off after year 4. When do we start seeing or what do you guys need to see before you can start adding carry pump into your mine plan?
And when does the market get word of that?
Well, we're expecting, I mean, to get car and pump into reserves next year. They are we're not in a rush. I mean, we have, we're just finishing, I mean, the 1st year of Hounde. So, we have another 3 years before we see that, that thing going down. But the objective would be at the latest by 'twenty one to have Kari Pump.
Into the life of mine plan. But, obviously, if we can bring it earlier, given the high grade of Kari Pump, we'll do it. So, we just need, I mean, to have, you know, the right permitting, around caripump, which, you know, we're looking at also a short way would be to be able to include Kari Pump into the Boire permit and into or into the Vindaloo permits, because then it's straightforward. For that, you need to demonstrate that there is continuity between the different deposits. Which we believe we can demonstrate.
So, you know, that's the subject that the team is working on in order to bring, you know, kind of pump as quick as possible into the life of mine plan.
So then, I mean, is there a plan then to also, depending on how big Karapam gets, depending on that, are you looking also at expanding the plant as well or right now, let's just take a separate time?
Right now, it's not, you know, just based on Kari Pump, it's not the objective because we believe that with the numbers that Kari Pump, it justifies the fact that we will be able to have, you know, Hounde 250,000 ounce plus, you know, for the next 10 years. And the objective is not, you know, to bring down that life of to 7 years by increasing the capacity. But given that Patrick is putting, again, 150,000 meters drilling program, you know, on the Kari area, if Patrick and his team are, you know, as successful that they've been, you know, this year, then, you know, if you're starting another, you know, 800 to 1,000,000 ounce, again, in that area. Well, then you probably have to think about what's the right size for Hounde going forward. And, we know that, and, better could elaborate on that, but, you know, we tend to have a lot of flexibility in the construction and design of our plants.
So we know that it's a pretty easy and straightforward to increase the capacity. We would be looking at, less than $50,000,000 CapEx, I mean, to increase by 50%, 70% capacity at Hounde. So, it's something which is easy to do. We just need make sure that, again, capital allocation discipline that is the right thing to do going forward.
Sebastian, one last for me, and then I'll stop asking questions and enjoy your burgundy wine. You're going to serve us later. But just on the dividend, what do you think is a meaningful dividend you need to pay, and what should be a meaningful dividend given the assets you have? And Number 2, I was just surprised to see buybacks on there. Obviously, you don't have a very liquid stock.
You have a 30% holder. You have a lot of long term shareholders that aren't really turning it over. And given the volatility you see when you miss earnings by $0.01. And again, the market doesn't look at 1,000,000, it looks at cents. So if you had 1,000,000,000 shares, no one would care if you missed by 1,000,000, but you don't.
Why would you even look at a buyback here?
No. So the, sorry, the buyback was a joke because last night, we had dinner with, with Ovais and and I was, I was with Clive from B2 and he was hammered by investors saying you should buy back your shares and they've been long debate during the dinner about, whether you should do that or not. And, it was not very enthusiastic about the subject, but looking into it, So it was a funny discussion. So this is why I was mentioning buybacks. No, we're not into buybacks.
As you mentioned, we still have liquidity issues on the stock. So we need to increase the liquidity on the stock, in fact, on our side. In terms of dividend, I think it's too early. We haven't discussed it in terms of policies at the board. We've been discussing the fact that we want to be able to implement as soon as the cash flow comes through for our shareholders.
But we all know that you don't want to do a dividend just for the sake of announcing a dividend. So, it has to be significant, but significant and sustainable. And sustainable means that you are able to continue to address the 4 allocations of your cash flow that I was mentioning So you don't want to put a dividend that will basically make you unhappy in your capacity, to allocate to sustainable CapEx exploration and gross construction, gross projects, So what's the relevant numbers? I think, you know, you'll tell me, but I think, you know, above 3% yield is, is something that, you know, we should be looking at. But again, too early.
We need to get, BT into production and demonstrate our ability to regularly generate strong cash flow so that we can get there.
Great. Thank you. I think in essence of time, we'll take a 5 minute break and then start into a next session. They'll obviously more time for Q
back to, our, growing cannabis, but I can't see the plants here. Where are they? I mean, we should, we should, we should bring some, samples. Okay. Quick discussion around, our different levels, and I'll start with operational excellence.
I'll try to be quick on the operational side. I think everyone is looking forward to see some big update on on the construction side in particular ity and also on the exploration side with Patrick. So I think most of you, most know our assets. I just want to highlight few case studies, and then I'll move forward on project and exploration. So first of all, what do we call operational excellence as our first pillar?
Well, we've been defining operational excellence around basically 4 elements. First one is hands on management. 2nd is leveraging geographical synergies, but also having a strong operator, focus and strong in safety and CSR, which is obviously our license to operate and which is critical in our sector and in particular in West Africa. And I think this has been translated through the fact that over the last 5 years, Endeavour has been consecutively meeting guidance every year, but also over the last 5 years endeavor has been reducing all in sustaining costs and increasing production. So in terms of hands on Malo, I think we have, with our key operational people being based in Abijon, This is a pretty unique setup.
So, hired of exploration, Patrick, a Chief Operating Officer, head of construction, better. They're all based in Abijon, which is, you know, the best way to be as close as possible to operations. They're not based out of Perth or Vancouver. They are in Abijon. And we want to make sure that they are all spending as much time as possible on-site with our guys to be reactive and also to be able to optimize, what we need to do.
So when you look at, in fact, you know, our map, we have, you know, from adigeon, all our sites are between 1 to 3 hours maximum. Flight time. And we've been progressively building airstrips on all our mines. So it's getting very easy to access for any of our guys, you know, to sites, whether they are expatriates, in roaster or whether they are management you know, including myself based in Avidron, or, in London to go and spend time and efficient time on-site. It's also very important, you know, to spend time over there.
And, you know, some investors, you know, have been telling me we like endeavor because you've been operating successfully in that region. And it's no secret. It's because we are spending time over there. I usually spend between a week to 10 days, every month in West Africa, both to review the performance of our mines every month, but also to meet with our key stakeholders, whether it's government, whether it's communities, and spending time on sites. And, you know, some of you went to the, you know, semaphore visit.
I think it took, you know, 8 hours to go to Bongo. You know, if you had to do that on every roster and, you know, as, you know, management, if you had to do that every time, what happens is you decide, you know, quickly you don't want to go, and you don't want to do a conference quarter or video conference quarter. So what you want to make sure is that your people and your management and the key technical people that you have doesn't and are not afraid of going on-site because things are happening on-site. Unfortunately, for me, things are not happening in London or in New York, things are happening there. And we need to make sure that we spend as much time as we can to be reactive.
This industry is about, on the day to day operations. I mean, we're getting every day some calls with problems. So it's a problem of how do we fix that as quick as possible, whether it's on construction or whether it's on operations. So you need to have easy access to each of your operations, And therefore, having the team based in Abijon and being 1 to 3 hours away from each of our operations brings a lot of satisfaction much easier in terms of managing our performance. The other thing is being able to have the right technical experts.
So we have enough with going back to 4 to 6 mines and currently 5 mines, it allows us in the same regions to bring on board in Abijon with the right technical support that can work across the mine. If you're a single asset company, I mean, you're not going to bring experts in the different fields. But if you have 4 or 5 mines and that all those mines are in the same area, then you can start bringing the right experts that will work, you know, for all those mines. So it helps a lot for us to have this, you know, strong technical team that is able to work across the group to improve our performance. So to come back to Dan's comment on Agbaou, I just want to give a quick case study on Agbaou.
So Agbaou was built in 2013 by Peter and his team ahead of time, 2 months ahead of schedule, commercial production was in January 2014, completed 150,000,000 CapEx under budget for the completion, 0 LTI during the construction. So yes, you can operate in Africa, including in West Africa without any LTIs. But what's interesting is to see that since we commissioned Agbaou, we have been systematically 51% average annual production above the FS, 51%. And we have generated so far $170,000,000 of additional after tax cash flow compared to the feasibility study. When you look at first and where it comes from, you see that in white, you basically have the production that was supposed to be done, you know, in the feasibility study, and you have in gray what we've been doing every year.
You have also the dotted points in red is where the all in sustaining costs in the feasibility study were. And in black what we've delivered during those years in terms of all in sustaining cost. So what you see that is, in average, again, have been delivering 51% more production that was in the feasibility study and overall 10% less every year on average in all in sustaining. So when we publish feasibility study, we are accountable to it, and we deliver on it. So where this success came from, if we take specifically on Agbaou, where the first thing was the big success was on the plant.
And, and in fact, you see that, we've been constantly, you know, 30% above nameplates through, you know, the Agbaou plant. And overall, we've been added, you know, over 6,000,000 tons, you know, that has been processed, you know, since we commissioned the mine. And the second success has been being able to bring more oxide material. So it's been 2 success building the right plant, being able to have, you know, highest throughput, but also being through exploration brings some more oxide to the, to the feasibility study. And when I look at, you know, again, Dan on page 11, sorry, we don't have, burgundy wine, on page, on this page, page 11, when we launched the construction of Agbaou, the feasibility study stated 800,000 ounce of reserves.
At the time, we were a small junior company. So we're looking at small assets, trying to grow progressively. And when you look at the cumulative depletion that has been going strange 2014, we still have today, in total, a 1,400,000 ounce reserve endowment. Between the reserves stated in the visibility study and what we've been producing, we've been adding 500,000 ounces on top. And I think we'll continue to add to Agbaou.
But, clearly compared to the potential that we see at Hounde and Ity, it's going to be less. That's sure. But it's been already a high success. And if you look at the payback of Agbaou, it was, in fact, 18 months, as for 2 years, but now it's been 18 months. 18 months payback for Agbaou.
And we're looking now at something close to 2 years, you know, for Hounde, and I hope that Ity will be also around 2 payback. And when you look at the 1st 4 years, we have, in fact, a 60% IRR just on this investment for Agbaou. So clearly, I mean, we are, you know, we've been adding $170,000,000 of new extra cash flow into this. So yes, I mean, we've been happy with Agbaou. I think Agbaou will continue to deliver for the next 3, 4 years.
And at the same time, we need to prepare for the next the next projects. And the objective has been to start to grow the size of the projects that we are looking for. Hence, the discussion we'll have on Kalana We see a lot of potential in Kalana. When we bought it from Avnet, 120,000, 150,000 ounce annual production, and given the exploration potential that we see there, want to do more exploration because we want to bring it at above 200,000 ounce annual production. Hounde, not going to describe in detail.
I mean, the, the Hounde asset I think I would just, you know, show a quick video on Hounde and on the construction at Hounde. It's now I need to press it's after this one. Okay. Sorry. So I'll continue with 1 more.
So Hounde, this was built again as Agbaou ahead of time, 2 months ahead of schedule, but also reaching nameplate capacity was achieved only a few weeks after the commissioning, below budget and 0 LTI. So, you can see, the team was pretty happy. Okay. Sorry. So it was the time in fact to launch the video on Hounde.
I need I need to press a button. Again.
I have visited maybe 7 or 8 mines in my career now. The last 4 years, 3 in Australia and 4 in Western Africa, but I've never seen an inspiration like that. This is the state of the art. I mean, the engineering, the setup, the choices, the involvement of the local community in building the camp, the quality of the camp, the quality the administration buildings, the equipment. I mean, the choice of equipment.
I mean, it's just amazing. I've never seen something like that. I I think this is the best ever, plant. It should be a role model for anybody who wants to, you know, so I'm very grateful to everybody who's done the hard work here in the sweats. You know, it's not easy.
So and, as an African, I'm very proud that this installation is here in Africa, and that's what we're also doing very good good community because the mining industry is always under attack, you know, or for environment and for taking care of the people. I think we're a good example here in both areas. So I think, that this should be our templates, you know, and we should move from here to do even better, you know, but, endeavor is is quite on the right size and on the right track anyhow. So but we are, as an ambitious company, we are still hoping that we will grow furthering out.
Yeah. So that was about, Nagib Torres. See? Happy shareholder. He wants us to continue to grow and build more mines.
So, you'll probably see next year the same video about the Ity mine and the fact that it's even better than wind Okay. So now looking at, you know, at Hounde, I think I would, you know, simply say that, you know, after 12 months of production, Hounde has been performing well. Again, we are ahead of schedule in terms of, the DFS. When you look at the 1st year of production, you know, we are looking at, 265,000 homes. And, when you look at where we are at the end of October, you know, we are right on track and probably be, you know, a bit above all that.
Overall, I mean, the plant has been, again, working very well, both in terms of throughput, but also in terms of of recovery. So, so far so good, happy with it. When you look at the contribution of Hounde, obviously, this year, has been, it's been important. You see the, the Q3, as you know, is during the rainy season. So we usually have in our lower Q3.
And we usually have, in fact, our best quarter in Q4. So our 2 best quarter are usually Q4 and then Q1. And the lowest one is Q3. So, I would just move to Agbaou, same thing in terms of production and all in sustaining. It's, around, we knew that in 2018 Agbaou will be in a transition year.
As we move to a bit more fresh, fresh material, but we'll be in the range of 140,000 ounce and all in sustaining, you know, around 860,900. When you look at the performance quarter after quarter, I mean, we are track, I mean, to meet those guidance. And clearly Agbaou going forward will be in the range of 120,000 ounce, you know, compared to the initial, you know, 1st 4 years that we had at 170,000, 180,000 ounce. Ity, won't comment too much on ity bleach. It's been an operation.
Going for 25 years. The operation will last in January as we smoothly transitioned to Ity CIL, has been a very successful one in terms of cash flow generation over the last few years. And then in this year. This year, we should be above guidance, in fact, on, as we said during our Q3 results, given the strong performance of ity glitch, both in production and all in sustaining. And therefore, a strong contributor this year for cash flow.
But next year will be, obviously, the 1st year of, of Ity CIL. And the fact that are 2 months ahead of schedule means that instead of having just half year of production of Ity CIL, we should be close to having three quarters of production of Ity CIL. Karma, I would like to, just, hand over for a few slides to, to Peter, ahead of, of projects so that, I can comment a bit on, you know, the significant revamping that we've been through, you know, Karma over the last 18 months, which we bought it from TrueGold. In particular on the plant side, in completely changing the optimization of the plant. Have to say that, you know, federal is, is, you know, one of our high potential, dude, He's been, you know, working for the company for the last 10 years.
He's been, you know, part of the Nzema construction Agbaou, leading the Hounde construction and now leading also the Ity construction. He's only thirty three years older, but I can tell you is impressive and the ones that I've seen Hounde, you know, I think have been impressed and the ones that we'll see soon, ity, you know, should be, should be impressed. And on top of that, he's part of the Australian team doing skydiving. So I'm a bit upset because I've told him that until he does the first goal for IITI. I don't want in to do any more skydiving.
That should be okay. Thanks for those kind words. So Karma and the plant optimization projects don't only do our new greenfield stuff. I think this is a good example of where we also contribute to the existing operations in only optimization, but brownfields projects like the Agbaou secondary, the Tavocado, underground, backfill plants. And, and yeah, most recently, the Karma plant optimization, There's a lot of acronyms, on the left and probably a lot of processing, detail, if not many people are interested in, but I think the The thing that drives our design philosophy is, is commonality, reliability and repeatability.
He would have had, had us discuss it a few times if you've been on-site and that's what we've done with this, this client. So Previously, it was capped at a 75% of its nameplate, and it's operating at 24%, above its nameplate at the moment. It's been a, it's been another success story for a relatively modest capital investment. Some pictures of new ADR facility. So this was a front end back end, upgrade and, Probably, the biggest difference between what we had before was that we've been able to sustain production through the wet season.
Previously, we'd, moved down to 50% of planned production through the wet and, yeah, presently we have that reliability and availability that we were chasing before. This is some pictures of the, primary, secondary crushing plant and, and the new dry plant. So the, and lastly, the HVAC and cement solar system, the cement solar system and storage to be, we increased capacity by circa 300% and We haven't had a single day of lost availability due to cement supply and the supply chain security, something we're engineering to, into all of our plants. Commerce production profile, you can see the, the benefit of our work in, 2018 forecast. All in sustaining is towards the lower end of guidance and, there's another 25,000 odd ounces attributable to a mine where we're, we're hauling from a for a bit further away.
So we're, with the base elements state that we should be having a slightly increasing cost profile, we've managed to reduce as well as increase production. I'll hand back to Severin. Safety and CSO.
The last point on Karma is, we're starting to see some improvements and the benefits of all those changes. And if you look quarter after quarter, the all in sustaining getting there. I mean, the objective was to be, in the range of 800, 850 Max on Karma, and we're getting there. So, pretty, pretty happy with the changes that were done on this asset.
Before we do it, yes, sir, we can take some questions on the operations.
Yeah. Otherwise, I'll jump quickly to projects and exploration. No questions? I mean, you can always have, around a good burgundy wine after. I hope I hope you have burgundy wines.
I think we do actually.
Okay.
White and red.
So quickly on safety and CSR, which is ability, you know, a key pillar in terms of operational performance, you know, we're working towards trying to reach the 0 GrAL lost time injury frequency rate. Which is not easy, but we are improving year on year, and we're trying to continue to focus on this subject The key motto is there is no job which is more important than your safety on-site. And we're trying to ensure that, from time to time, the team and the management team in particular is able to stop when it is required, even the operations for a day, if they feel that at some point there is one significant subject that has not been properly addressed in terms of safety. And we had that, twice this year at operations where, the management decided to stop the operation for the day to ensure that they were able to get all the team back into a room and to look specifically at some potential worrying environment. And that's always a blow.
It might have a short term impact, but in fact, on the long term, it brings the right, the right results. A single construction cycle card is, is just impressive. You know, 3 projects so far in a row without any LTI when you look at the number of hours that has been worked for those 3 projects, It shows that the culture of safety is from day 1 through the construction. And this is why after construction, we're able to maintain also this excellence in safety throughout operation, whether at Agbaou or at Hounde in particular. But it's not just about, safety.
It's also a license to operate and it's also about the communities and how do we work with the communities. I won't go too much into details, but we will be presenting a beginning of next year, the new local development funds that we've been working on, was discussing with some investors yesterday, the fact that, working with communities is becoming more and more a question of how can you help generate income businesses in the areas where you operate because what you want is you don't want to be the only income business in the area. Because you can't afford jobs, I mean, for all the communities. So what you need is to be able also on top of the usual things that we are doing. Need to make sure that you're able to help entrepreneurs, local entrepreneurs to build their own business so that they can create growth for the future and that they can be also, employers, you know, for the communities.
And what we've decided with, Magista Orest himself is that any dollar that endeavor would put in a fund, you know, to help and support entrepreneurs locally, he would put the same dollar. And we've identified already, you know, 3 projects for our 3 countries where we operate around Hounde, Ity, and Kalana. That we will be presenting beginning of next year where in total, I mean, andeavor will be spending over 3 years, about $9,000,000 of those different projects and that, Najib Torres himself will be adding $9,000,000 to this fund personally as his contribution to, towards the communities and developing entrepreneurship around those communities. One example, you know, which has been interesting is, you know, the, the cattle feedlot So for example, for the ones that came to Hounde in the past, Hounde area was very famous for the quality of the meat It was called the head gold of booking FSO, because they were exporting back 50 years ago. They were exporting meat quality teams across the rest of West Africa.
And over the last 50 years, they've been completely, unfortunately, dismantling step after step, this this remarkable activity. So we are, as endeavor, through this initiative, building again, some capacities in the area, to bring back, I mean, to Burkina Faso, this, strong cattle quality that we are able to do in the area. But again, we'll be presenting that beginning of next year. So obviously, we're working on all the, United Nations Sustainable Development Goals across all our operations. And you probably saw that we published our 1st sustainability report following the GRI reports and guidance, which is for the first time.
And as I said, 3 years ago, we're here to build a sustainable business and progressively making sure that step by step, we're able to put in place the right processes and focus on the different rate. So have a look at our sustainability report is the first one. So we'll continue to improve it, but I think it already shows some interesting features on what we want to achieve and how we want to achieve that. In terms of growing local talent, that's probably one of my key topics with the team as management. We want to be successful, we need to have local talents.
And, the best way to ensure that is to monitor on a quarterly basis, how we are improving in terms of growing our local forces and making sure that Our local managers are progressively taking the right level of responsibilities. And this initiative was launched last year, and we're starting to see some very strong and good results. We've appointed Mohammad this year, as new GM for Ity, which is from the region. And I think we will sooner point another GM from the region. We're also working a lot on, you know, men, women in mining.
I was about to say men in mining, but this we have already, women woman in mining, because, as you know, you know, women tends to be, you know, sometimes more efficient in particular in, taking care of equipments, driving. Yeah, yeah, yeah, yeah, driving. Yeah. So we have a lot of women, more and more women driving our trucks, and they are exceptionally good when you look at, the failures and the rates. And I think it's important also to grow women in mining.
Probably want to move to quick videos around few interviews we did.
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So we have, 4 more videos like this. If you wanna grab a coffee, it's gonna last about 6 minutes, and then we'll start with the second section.
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So moving to projects. How do we grow cannabis? Okay. So, First of all, obviously, this is, there's been a tremendous success around our construction team, very proud of them. The, the leader of that team, and currently the team is, he's here.
And therefore, I'll spend more time for him to explain what we've been doing and what has been, you know, our success around. But clearly, there was the Enzema built in Ghana in 2010, the Agbaou in 2014. And I hope that the case study then showed that, it's been a good mine and we'll continue a bit for a few more years. Hunde, which is already for us a success and soon, we're expecting to come up with a big success with ity. So far, all of them, we have built the 4 of them on schedule, or ahead of schedule on budget or below budget.
And with 0 LTIs so far. So strong construction track record. Wanna talk again about ahead of schedule and below budget. On budget. I think that, the different minds, speaks for themselves.
Is probably interesting and sometimes not necessarily shown is the fact that, you know, a lot of companies have been saying Oh, I'm ahead of schedule. Yeah. Okay. But let's look at the schedule. How much time did you take you, I mean, to build your mind?
36 months that's far too much. I mean, it takes us an average 16 months, you know, to build an average, the same type of mines. So it's not just about, sometimes goes back to quant funds, you know, what they want to hear, ahead of schedule, ahead of schedule. Yeah. No.
But the question is, you know, what's the time frame on which, you know, you're building your minds, And I think that it's been remarkable to see that our 4 last projects were built between 14 months to 18 months. Which is compared to peers, and we're trying to track that on a regular basis, in average 14 months quicker than a lot of the other mines that were built, recently. The other aspect, which is interesting, is to look at, you know, another benchmark, which is, what's the dollar cost per 1,000,000 ton per annum of processing capacity and what's interesting to see is that, you know, we've been, you know, driving down, you know, progressively, you know, our numbers to be below 100 dollars per 1,000,000 ton, you know, for, you know, a CIL plant. And I think that's also important. We're trying to ensured that we improve through the design and through our in house capacity capabilities, to be able to progressively improve this number of, you know, $1,000,000 per 1,000,000 tonne of throughput capacity installed.
The last one is what has been around self performing. In construction and I'll probably let, you know, Peter explain what we've been doing into this and give a bit more color what we call, in fact, in house, in our construction capability and self performing.
Thanks, Ed. There are production. And generally, that takes on the line of we manage an EPCM contractor, we're wholly different. We do use an engineering and procurement firm like a podium, but when we say self perform, we are the earthworks contractor. We are the civil contractor and we are the electrical contractor.
Presently, only, external contractor we have on-site is for and mechanical piping, SMP, and that's just because I can't persuade Seb to, spend the money for me to, yeah, buy a, the guaranteed SMP. And the criteria we use is that we need to save 20% and that includes the cost of all the capital to commence. So people look at our shiny new batch plants and all the equipment we buy. And, only budget of those to be paid back within a single project. So the fact that bulk, the bulk of them will be used over, over the next 10 or 15 years, they've, they've already been paid for.
So that, their capital is written down over one project and, for each subsequent project, not only commence quicker than anyone else, we can, we can do it for cheaper. So the number of self performed task Houston from NZEMRA at 25 percent to 95 percent for EDCIL. We've had an increasing, self perform capability, but also an increase in capability for what we can do. Our current Civil's team, if we had to drag them over to go and rebuild Agbaou somewhere else, we be complete on the civils front in, in 6 weeks, versus, versus 40 weeks for the first time around. So it's there's a lot of parallel benefits that, they only become apparent down the line.
So my favorite piece of equipment, that we own is, it's at 105 meter Cubed an hour wet batch front. We have a chilling unit down there that, adds water in at 3 degrees. Our concrete was looking that good that it prompted me to go and drive around the bridges of Perth to go and get some comparison, for data. And, we do have the sexiest concrete in West Africa. So you're going to give the cost savings, it's with all in costs, including rebar and, all management costs, including P's and G's, is running around 600 bucks a cube.
Versus 1600, for peers. There's, it's a prohibitive amount of work very steep learning curve in getting these things set up, but I think the benefit speaks for itself.
Okay. So, I'll try to summarize what we have been doing only on 3 asset. First one indeed is Hounde, then I'll give up on an update on what we are doing in Ity. And also some ideas on the new greenfield discovery, Fetekro area that we made and we announced. In 2018.
Okay. In Hounde, basically after a couple of years of node drilling, I TVT where we have been heavily involved in the groundwork. So where we have been remapping and reanalyzing and receipt syntitizing, I would say, the whole over 1000 square kilometer package we have in Hounde We started again the exploration with, initial drilling in 2007 18 based on the ranking that has been done according to strategic exploration review. We did that. And indeed, we focused in the first area that was number 1 and by far in all the area.
The Kari, broad, calling soy and normally. So we have been working mostly on that. Again, our target according to the exploration strategy plan of this, 10 to 12 target that we selected out of many more in Hounde is to discover between 2.53.5000000 ounces over 5 years at if possibly a discovery cost lower than $15 per ounce. Next one? So some things that's very important, and this is a materiality just to show you how the big picture is very important when you do exploration.
A lot of companies, they have a small asset and so on. And work on this small asset without looking at the big picture. We have the chance on Hounde to have a world class settlements, a several license, overall 1000 square kilo meter. And I can tell you that each square kilometer has been mapped on the geological point of on the structural point of view, on the alteration point of view, on the gold coins and everything. It has been a tremendous work that has been done while we were not drilling and we benefit out of it.
Basically, when you look at this slide, okay, I'm sorry, it's a geological map. But it just show that basically, the, the Hounde 10 months is located overall broad anticline. When I say broad anticline, it's an anticline that spreading over dozens of kilometer. Martino, next one? Okay.
Here is Kari, okay. And next one, okay. And you see the axis, what I call F1 is the axis of this anticline. So structurally speaking, we have been working on that stuff, and that's why I was interested in the Kari area without redoing all the Birimian structural geology logic, basically in Kari, Ariel, there are 3 phase of folding. And the first one is a F1 stuff, which is structurating all the pile of handysite and Metabol can also demand in this big anticline.
But In the carry area, you have some public stuff with a secondary folding phase that created basically the sync line that you see in Kari Pump. Okay? So basically, of the formation with which the linearization of carotope is done. So It's not just like that. It's a big analysis to see why we are looking in this kind of area.
Next one.
So, just a summary of the carry area, basically, after we announced the discovery of the carry pump area, let's say, Q3, Q4 last year, We made an intermediate press release in May this year, just to announce that we have been extending significantly the Kari Pump. But also that we made 2 other discovery, namely Kari West And Kari Center, located, over the board Kari anomaly you see the extent, it's a huge area, basically a 4 kilometer by 3 kilometer or that's the extent of the carry, area where we made the discovery today. And still, there is a part of the carrier normally, called in Sonae anomalies, that tenders would be tested. Overall, today, even after delineating Kari Pump, we still have such 5% of the areas that has been drilled with drill fans at least with a two hundred meter. So we still have a lot of things to do.
Kari Pump, Kari Center, extended 1.2 kilometer. So we are talking a very large area and Kari West is the same. Everything is located less than 7 kilometers away from the plant and is located basically on the road. That is supposed to be built between Bouere and Vindaloo. So everything is perfect in term of location and in term of size.
Next one. So this is, the slide that was put in the press release on top of what has been said, you will notice that, this deposit is located at the boundary, at the control between volcanics and metal, volcano sediments and chemical sediment. Exhalative, what we call exhalative sediments. And this is very important because this has a role to control the mineralization. Basically, it's a matter of behaving of the rocks between ductile and brittle and everything.
And the fact that the mineralization can propel ate easily, I would say, within the volcanics by opening stuff. When it hit the chemical sediment, In fact, there is less, there is a kind of accommodation, but the mineralization is not going over So that's one of the reason why you have this kind of thickening of stuff because probably the mineralization couldn't progress more to Southeast. Still early days, we have a bunch of ideas, but that's what I'm saying. Definitely, that's very important. Today, what has to be noticed that basically it's 1,000,000 ounces.
The grade is 2.71 which is very high grade and it's, let's say, much higher than Hounde itself where we are targeting 2.1 And the low cost of discovery, because carry pump itself, the money we spend on carry pump, it's equivalent of $9 per ounce, which is one of the low in the industry. Next one. So, here is a section. So, basically, this is a kind of North Northwest, the South Southeast section. What you can see is that Keri Pump remained open in both directions to the south and to the north.
On this section, you have a very nice intercept and so on. Typically, that's something that's, again, slow dipping between 0 to maximum 40 degree. You see that at the bottom, there, we are barely at 150 meter depths. So we still have the possibility to go on that. So that's very good.
The continuity is tremendous. Each whole, at least, when I take only what we have been doing since the May press release, including the extension because we test, we had some failure. We went a bit far and so on. Everything included 85% of the holes and compare the mineralization. This mineralization is just continues just like that.
Okay? Indeed, it's a quartz vein system. You have pinch and swell. Next one. And the pinch and swell is very well materialized in this kind of cross section.
You can see that you have a very thick, very rich alternating with lower and thick and right That's something that's very important. And when I'm talking about the syncline form of this stuff, which is a secondary, the direction compared the main axis. That's what I'm talking on. And I like that because it's not because
Okay.
So in this kind of system, it's not because you have a senior internal with a lower grade mineralization that fifty meters away, you are not going to find a thick and rich stuff. And indeed, I don't tell you the story about the progression of excitement in team, but when we were eating some kind of stuff very narrow, not so rich and so on, the moral went down and after you move fifty meters away and you are swelling again. So this is the nature of this type of deposit, the beauty of it, it is very high grade. And very continuous. And that's a good next one.
This one was not in the press release. Ask Martino to put it. Basically, that's an accumulation map. It means that the quantity, this represents the quantity of gold you have per hole. It's not a gram pattern.
It's a meter, gram meter. It's a just to show you the impact of that. And basically, when you do the contouring, you see that first carry pump as it is defined today, is still open to the north, to the southwest and to the northwest. And I just want to show you this part on the northern part, we have tremendous accumulation in direction of Kari West. Which is exactly same lighting quite flat between 0 40 degree.
We don't know it yet, and I'll show you what we are going to achieve that. To prove the continuity be to both discovery, okay? This is very important. When you look at that, just look at the kind of intercept we've got here, I just took some of them, but you won't see that very often between 0 and 80 meter, 5 meter at 109 Grand. 11 meter at 31 gram, 20 meter at 17.
Some of the stuff is really outstanding. And it's not very often that you'll see this kind of grade, especially in the oxide section. So in terms of answers, where are we today? Basically, we are sitting with our 1,000,000 answers. And if we report it to the Hounde project, in one year, we have been adding 40 percent of the Vindaloo resource, and it's just the beginning.
And everything, the main difference also with Hounde is that Hounde basically we are producing Vindaloo. Vindaloo is a 90% fresh 10% oxide. Carry pump just because it's located with this incident interval between oxide and transition, we are at 45%. And this is at 1500 stuff. So basically on the production scheme, depending on the velocity, we are able to convert this resource into any kind of exploitation license.
Basically, we can increase thing to extend the potential up to, maybe 10 years of that, but depending on the career area potential, which is Kari Pump, Kari West and Kari Center, this thing can be a game changer for that. So that's why it's too early today to decide whether we want to increase the capacity of Hounde because my recommendation is let's wait until the end of next year to see whether we are talking 1,000,000 ounces, Gary Pompollone, or we are talking 2 or 3,000,000 answers because if you have 3,000,000 answers, I don't know, the decision to be taken, you know, in the plan, it's going to be completely different So that's why we are so aggressive and that's why we want to go very fast. Again, for next year, we are going to be very aggressive. We plan to drill between, let's say, around 200,000 ounces. We want to add before end of 2019 new indicated answers on Kari West And Kari Center and also to fill the gap between the deposit to try to understand better the continuity of one of the other one.
Next one? So basically, here, you have a kind of cartoon of what we have. In the circle is carri pump, but it's not today. The Ellipse, you have a carri center that's this Ellipse, Carrie West is located, and you see that we are going to have a 1st grid targeting Kari Pump extension because we still believe that there is a lot of answers. And again, remember what I said about this contact okay, this lithological contact between structural behavior or differently from volcanics and the Exelative Settlement.
So we do believe there is a significant potential to this direction by the Greek number 2 that we'll do in 2019, we'll be expand trying to expand carry pump towards the north but especially towards the west, where we are going to attempt to show the relationship between Kari Pump and Kari West This is very important, and that's where we expect a significant amount of ounces. It's too early to say, but, definitely, we are very optimistic in that stuff. That's Kari Center. Kari Center is a different beast of Kari Pump and so on. We probably are a much more vertical dipping, let's say, 60 to 90.
We don't have so much control, but what we know that we have a quite good grade, even if the grade is somehow lower than Kari Pump, but Kari Pump is exceptional in term of grade. And here, we are targeting maybe 2 gram perton, which is the average type of Vindaloo deposit. Okay. And here is Kari West. Today in Kari West, basically, what do we have?
We have one line here, one line here, one line here, one line here, you see, the spacing is two hundred meter. We have aircraft line recognitions onto over two hundred meter. And that basically the size of the anomaly we are seeing. And this is the infill program we are going to do to book indicated resource into that in what is known today as Kari West, not mentioning the junction, possible junction between Kari West and Kari Pump. Next one?
Okay. But Vindaloo has a lot of things to say. Basically, Vindaloo, we we think that Vindaloo has not been properly understood in term of structural behavior. Actually, I spent to geologists and they've been working a couple of months, remapping all the Vindalopit as it is today. And we have some confidence that many things we are missing in the past, so that's good for us.
And I think I've been spending $1,200,000 to $1,500,000 next year, to target some of the deeper stuff in Vindaloo and believe me, the potential is very high. So you see that this is a kind of representation of what we have doing. Basically, we have a set of, all food, going in direction And basically, what you see is a program we designed just to check whether or not it's foreseeable. So Vindaloo as it is known, That's what we are in our book, but we do believe there is a significant upside potential, laterally, and adepts because we have been mapping all the the fault that have been displacing the deposit, and that has not been understood structurally picking. So that's why no drilling was done for that because all the drilling that was done was to delineate stuff.
Again, shows us again and again that when we have some success, we must take a teach you to try to understand better or the big picture on the system as a whole. Next one? Okay. That's also some target. I've been talking of Dohun, Sierra Sierra, for a while.
Unfortunately, with a big success, we had on Garipan. We have no time, but this is maybe not a 1,000,000 ounces stuff, but this is very high grade stuff that we are targeting a little bit like Bouere. We may be targeting 3 to 4 gram, and it's not very located very far away. That's something we are going to do. We'll show next year.
Next one?
This is the last one. We'll take some questions now on exploration at Hounde?
Sure. I'm sorry.
Yes. Just on Keri Pump, like the
I guess the quartz veins, once you get down through the one hundred meters, it's just quartz veins?
Yes, it's a quartz vein system with alteration and so on. So it's quartz with a Series seat or the cost iteration, some sulfide. So it's quite a classical stuff. The key point is And that's why people are so amazed about that because we can discuss about the interpretation. That's right.
It folded second order compared to the main fault. But again, when you look at not in this direction, but if you look at the previous one, And this one, you see that the lithological contact are much more vertical, and this is related to the 1st folding stuff. So is a big anticline doing like that, but this is not much by this. So the mineralization is cross cutting like that. And when you look at that, you have a folding, but you have also a frost effect.
That's why you have this kind of thing. And this is the only way if it's not a quartz vein extension type, which we don't know whether it's there are very little amount of deposit like that in the world. Okay, you have not to, maybe, but it's a completely different environment. And this one is one of a kind. And honestly, I have to be humble don't understand everything.
But again, that's part of the analysis that was done. As I said, I didn't put the slide But when you look at, there was a lot already, a lot of readings that had been done on Kari. Here and there, there are the sneeves, they have a good intercept and twenty five meters not the right direction and so on and so on. So by putting back all the big picture and looking at secondary folding and so on, That's why we decided to go systematic on the carry area and hitting these kind of things. And from a very narrow area where we were confident there was something we were able to expand it a lot.
I guess just taking a stab at it from an operating perspective, you know, when you get off the saprolite, lateralite and saprolite, you'll just see this white court stuff and
Well, basically, that's what you say. That's why initially we were even able to say exactly what we were discussing at because it was in the oxide and you don't see the texture of the remuneration And it's only when we have been starting to drill in the transition and the fresh that we started to understand better where the goal was associated. But basically, it's related to quartz vein system, which is, or elongating and pinching and swelling at it is in many places. The only difference is this is not vertical. This is more flat laying and so on.
And, okay, again, after I'm not a mining guy, okay, but I know that even if you have to take away fifty meter or above and so on, you are going to start to make money immediately from the surface. Because, you have good stuff, very close from the surface. And again, when you look at the proportion of oxide and transition, When you look at the numbers we have between 151250, we had the 200,000 ounces decrease, but the grade is increasing. At the 50 ad, when we designed the picture at 1500, we have, let's say, 1,000,000,000 ounces at 2.71. When we did it at 12 50, yes, we had the decrease.
We had only 800,000 ounces, but the grade was over Tigran. And when you look at that, the proportion of oxide and transition between 151250 went from 45% to 55%, 60%. It's just that by going less deep, you put higher grade in your basket.
There other questions on Hounde?
Yes, Patrick,
just on the, 1st phase of holding and the 2nd phase of holding. Here, we're seeing the anti form in the 1st phase. On the next slide, is that gentle syringe? Is that a gentle syringe here?
Yes, but it's not the same wavelength. You have a big folding. That's something that you follow over 60 kilometer. And on top of that, you have a higher wavelength stuff that has not, it's a different phase. A later one.
And even after that, we have a third one that we know is occurring, okay? So honestly, I am very cautious about the geology community application because it's still very early days. And on top of that, when you look at the anomaly, I don't know But when I see this kind of stuff quite flat lying, it has to have a route somewhere. We still have to find the route from where it's going from. And there is still the possibility that below the career anomaly, somewhere at depth, there is a big, inclusive, sourcing all these, whether it's Bouere, whether it's Kari Pump, whether it Kari West, whether it Kari Center.
It's just the beginning.
So in essence of time, we'll go straight to Ity and leave questions for later? Okay.
Ity, I'm going to go a bit faster. Basically, that's the element we are working on. That's what what we own. It's a big area. It's over 1000 square kilometer, basically 100 kilometer along by 10 to 15 kilometer a while.
Our target was based on the initial success we had on ity, where we have been extremely successful. Already, we have been adding, in Italy, area 1,600,000 ounces, mostly earlier on in 2017 where we upgrade the DFS. And I've been adding, I don't know, $300,000,000 or $400,000,000 to the project NPV. So Next one. Okay.
This is a geological map. We have been working this area quite for a while now. Basically, on a geological point of view, very simple, you have a big, what they call a Grand Aplore intrusive suite, which is a kind of, goodness, grenade or IT stuff that's including the Biery Mian said demand to the North in Ity and that becoming a little bit blue Metamorphism towards the south. Next one? Okay.
This is an initial map that I've been showing in the beginning, and that show just to show you that in ity, 100 PPB is nothing because you have gold everywhere in the system. This is a very prolific system. And that's why, you know, we have so many target and it's very difficult to differentiate by the, by the goal in solid anomaly alone This trend is just amazing with some value in JOKM or in auger that are just jaw dropping because sometimes you do an auger stuff. And within the first five meter, you have up to 10 gram perton, just in that. Does that mean that you have continuity because a lot of this anomaly may have been displaced but just for you, the polyphony of the system, and that's somewhere where you have to find the root where the system is.
Okay. We have been acquiring in 2017 a very large scale. High resolution, V terms, stuff, and so on. So we're still working on that, interpreting with the data. The problem we have in this area that there is almost no ad crop.
So basically, you have for the calibration proposed and due to the high variability of the your, you encounter, you have multiple solution when you want to deconvolute the stuff and producing it in target, but we are still developing some target. Addressing this? Next one. That's what we have been doing at the end of 2017. That was for the project.
So you see how many meter we have been reading, 55, 69,000, it was very aggressive. Next one? This is, 1.5 of the detail what has been added. You know, namely Baccatouault, some extension in Deep Montete and also some extension in the APO. Next one.
Okay. So let's go back here. You have a kind of big picture of the type of grade and thickness that are encountered in the target we have been selecting in this area. You see where the activity was located in 2018, look just looking at the green dot. Basically, we have been working in the APO area and mostly, we have been working in the Kepler, the flawless exploration license that we control 100% immediately to the south where the Le Plaque discovery has been made.
So I just have a focus on Le Plaque because that's the discovery we announced last year with very limited resource, that was announced in, first quarter of 2018. It was very small, but we published it because we said we would be publishing something I think the one we are going to release in, at the end of the first quarter in 2019 is going to be much more representative of the weight of Le Plaque in this area. Again, you'll see tremendous intersections. So something this slide is quite nice. You'll see a couple of cross section.
Actually, this is the size of the initial pit. It's much larger than the one we published in on the 85,000 ounces. This is what we call Le Plaque Maine. This is Le Plaque Southeast, and that's a target we call it Epsilon. What you can see And I'll show you on the geophysics that Le Plaque is a completely different deposit from Montiti, from Daimler, and so on.
It's a mixture of contact at the intrusive, to the north between the georite in purple in Violet, and the pink is a Grand audio white, and it's located as a contact and with that. Is it characterized by strong, deep, quite vertical stuff, but very, very high grade. Okay. So basically, This is the best, some of the selected stuff that we have been looking at, in this area while expanding the Le Plaquemaine area. So we have been expanding it and you see the contrast between the red and the blue the blue and green stuff being, the diorite.
And this is a granoduritic body that extending toward the Ity area. Some intersect are just very nice. So I don't comment that, but you see this kind of thing. We are typically, in the very rich part of the ity. Is that what we love in ity?
A lot of oxide and very high grade combined with a very sickness. Here, you have just some selected intercept, some things that we didn't communicated yet because it was drilled after we made the press release at the end of Q1. Just if you look at the thickness and so on, in red, you have some very nice stuff, 10 meters, like 6 gram, 5 meter at 32 run and so on and so on. So we are in a rich, high grade territory. And again, we are targeting for this kind of stuff between 2.6to2.7 gram per ton again.
Here is a cross section of the Le Plaque Maine. You see the quality of the intercept. And the mineralization. So indeed, it's there are some variation, but we have some very high grade stuff and it's still open at depth It means that we still have some potential to increase the size of that stuff below 100. This is another section which is a long section.
You see as a kind of same as a kind of the intercept that we are to, let's say, 12 meter at 25 grams, almost, we have high pocket and so on. It's, it's a nice stuff, and everything is broadly located as a contact between Duarte and Grand Now Duarte, that's why with the geophysics, we are able And this is an orphan extension of Le Plaque, something that you guys have not seen. So basically, this why we say Pete is the first area, and we are sending it in that direction to as follows, and you see the type of interset we have. And this thing, we do believe it's going forever in the direction of Fales and in direction of ity. So we see the beginning of the delineation of this thing.
Next one? Okay. This is another type of this is linked to La Plaque, but this is 100% located within the Grandio Deloitte itself. So it's a small shear zone parallel between themself. So you'll see, there is some time a problem of continuity, but even if the grade are sometimes very nice.
We have a much more difficult to under time, you know, this parallel trending, which may not have a very long continuity, but it is a part. And that's something also, sorry, that I'm doing every month or every 2 months when I do exploration, I have a new pit to be designed because it helped me to understand the propagation and where I have to check again to see whether I have a failure or a misunderstanding in the pit. So I'm trying to combine my exploration effort. Believe me, each drilling campaign on this the resource geologist is validating the role because he will have to validate the resource. We are doing 3 d stuff, and I'm doing a alternative pit just to know and to integrate to discuss with a mining engineer, whether it's feasible or not.
If he said me or don't look at we will never produce that. I'm stopping that stuff, and I'm going to concentrate. So it's just a matter of very interactive stuff. And that's why I try to apply to that. Again, there is upside on Le Plaque in this area, We are talking about Le Plaque, Le Plaquemaine.
This is the sheer zone in the granular divide, but we have a YUPELO target. We have low yellow target, and we are extension to our allies also. And some of the yellow point to the north just returned yesterday, some tremendous intercept. So this stuff is going on. Probably, to our filets and to our, the north.
We have today. This is Le Plaque. Basically, we have 1 kilometer, almost unreal on the prolongation of the Epsilon plant. So Skye is a limit. We are progressing on that, and we are doing as much, as quick as we can to do that.
That's supporting. This is air core stuff. That's something that we were not doing before because we had too much water. So we had that the system to do this kind of a course tough, quite efficient to receive, some stuff, but some of the aircraft show very nicely intercept and that's something that we base our regional exploration on that stuff. Next one?
Daapleu, this year, we, we drilled a few deep hole in the upload just to prove that the model was okay. And indeed it is, we found the mineralization where it was expected. At the depth, it was expected. So basically, we prolongate compared to the lowest part, lowest pit at this plant in the DFS. Basically, we prove that the high grade stuff just as a contact between the free dies, the, rhyolite and the Metabolucanos edema is, this is going forever at depth.
This is a typical share, and it will go, go, go, go, go, go. And you'll see or come back, sorry, Martin, you know what? 6.3 meter at 8.4 gram, and all this section is just like that and going forward. So we do believe that there is decent underground potential in that blue. It's not the time to do it now because this all are expensive, but definitely in the future.
Next one, that's something that we have not been addressing is what is below the ity deep quantity pit. This is just leaproga view, and it's pretty obvious that we have some high grade offshore below and EDG flat that has not been investigated now. The fact is, although I know there is potential, it's not the right timing to do this kind of thing, First, we must exploit and we'll lose the exploration on the right time. But there is resource there that has not been put into the DFS. That's for sure.
Okay. For those who came to see, I think it was 2 years ago in ity, you remember that everybody was when we make back at all, basically, that's a back at all deposit. That's 700,000 ounces that will be over 2.1 gram, 2.2 grams. And if that's the heap leach pad, okay? So this year, we sank a deep hole, you see this hole, very deep with the angle.
We could not ban it more. But we found, even though not the type of grade riding back at war, but we found a few area And the system in back at war is just like the flower. You have a deep rooted stuff. And then when you arrive at the surface, everything is opening up. And that's our, so we are convinced that there is a lot of potential below the leach pad.
The point is the leach pad being active today. We cannot read it. So I need for them to stop to wait for 1 year until it's safe to drill. And again, whatever is in leach pad, that will be the first one to be processed in the CIL to clean the stuff. So Baccaro to the Southwest is not finished yet, and it's still a story.
And again, I have all the historical data for the former BGGM, and there are some very good looking anomalies that were never brittle and that's located below the immediately below the center part of the leach pad. So It is a going on story. We have to prioritize and so on. It's very important for a Plaque because it's an exploration license that need to be converted in exploitation license. So this is going to take a couple of years, but again, the average grade we are targeting is 2.6,2.7, So it will feed very well in the decreasing of Hounde, of ity production after year 2 or 3.
Next one, Okay. Just a word on the Tula Ploe. Tula Ploe is a big license to the south. We've been doing some geochemes trenchers and so on. We are pre selling the geology, which is a bit different from what we are expecting, but we are going to start initial drilling next year.
Okay. So that's the
next one. So we can take
it for questions now on ET, exploration. No one? Okay. If there's no other questions, we'll go straight to You
know it all. That's fine. Fetekro. So just a few slide on fetekro. We have a lot of exploration license, a bit spread out in Cote d'ivoire and also in Burkina Faso What I've been trying to do, you know, is to prioritize all that.
So we have been relinquishing a few of them where we were not seeing of potential or at least potential, to reach above 1,000,000 answers, okay, from very quickly. And Fetekro is an old property that was in the basket with La Mancha Cote d'ivoire, where our initial work has been positive, but we don't understand very well the continuity 3 years ago. And honestly, with what had been achieved on Ity itself, because again, when, back in 2013, when I started with Lamansha, you know, there was 200,000 ounces in Ity, And with the potential we were seeing in ity, basically, it was much better for me to ask Sebastian to spend the money on ity rather than in Fetekro But when I did the review of all the regional exploration license, we changed a little bit the hypothesis, especially with a variation of let's say the overall Caribbean stuff in Lafigue stuff, where we are, we were thinking that there was a possibility of trust to explain that. And that's what We tested. So next one, Artino.
Okay. Well, this is just a core. So we are also talking about cross veining stuff. This is at the contact, intrusive. This is a typical Lafigue core.
With some very high grade. Obviously, this one is 10.6 meter at 8.03 grams. So we are quite happy to see that with some visible goal. On top of that, you know, this is a Lafigue area where we have been working. So that's where the two cross section We have been embarking in, overall, GOKM anomaly, mapping, installing solid stuff.
And we came up with at least 10 additional target that we initially tested by drilling. So, you have some of the result you have after one cross section, but all this is almost untested. And we count on this anomaly to add up to the potential of the Fetekro area today in Lafigue Something I would like to say and that has not been put in the press release is the sensitivity of the pit at 12 50. Basically, this stuff is very, very strong because you have almost no decrease in ounce between the 15 100 pit and the 12 50 pit And the grade remains the same, namely, basically, you lose just a little bit of ounces, but the grade jumped to 2.42 instead of 5. So it's a very solid type of deposit starting at surface.
I think the strip ratio should be around 7, this kind of thing. So it is enabled for this type of thing. And again, today between indicated and inferred, we are close to 7 20. We know that we have found we can extend that by at least 30% just because we know we have holes that found the mineralization, but we don't have enough hold to qualify it even in inferred. So we think that the potential of the Lafigue stuff is at least 1,000,000 ounces, maybe more because it's still open.
And we, other, a couple of other target in this area. This could be suitable. That's what we think for a standalone development whenever we want. Next one? The core.
So here is the cross section. So it's very simple model. You have a Basal thrust and aminization. Is, you have several source and the mineralization is located within the hanging wall of this basal source. This is a Lafigue Center.
So you have 2 type of deposit and next one. 2 type of, trust affected. And here, you have a FELSIQ in Tresil with some very interesting like 30 meter at 12.2 and basically, mineralization is associated at that. On the map, it's still open towards the south. Towards the east.
And, basically, we have some significant extension that we can expect on that. And this is simply a cross section of 1 anomaly that's located only 1 kilometer away. You know, we have only a couple of fans on that stuff, but already, we have some good looking intercept, five meters at 7.6 grams. More or less in the same environment laterally from the main deteriorating share.
Okay. Any questions on fetekro before we move to the last presentation? Great. So thank you, Patrick. And next step is going to talk about balance sheet.
I have one good news for you and the last one. So I'm going to take to speak about, the balance sheet and the management of our balance sheet, which is a key pillar that Saba has mentioned earlier. And that aims to optimize the shareholder return. So basically, we have 3 main objectives in managing the balance sheet. First, is to maximize the return on capital employed.
As you have, as you will see and as you have seen, we have invested in more 1,000,000,000 over the past few years, and we want now to give our shareholders the maximum return. The second and the third objective are related to the financing of the this capital employed by finding the right balance between Dish the use of the equity and the use of debt. Regarding the equity, the objective is to limit the dilution to shareholders and to ensure maximum return. By getting the debt, the objective is to use to ensure the financing of our organic growth. While optimizing the cost of the debt.
So now that our high CapEx phase is, is coming to an end the objective and the focus of the group is to be to maximize the return on the capital employed. So on this slide, we tracked the capital employed over the past few years, which explain how the balance sheet has evolved since 2015. Aside from operating assets, which are here in blue on that chart, you see in gray, the main organic growth investment which are mainly Hounde CIL, which has been finished in 2017 and ity CIL, which is of course construction. So keep in mind as well that the increase also due to the 2 acquisitions we have done, so Karma in 'sixteen and Kalana in 'seventeen. So the $15,000,000 to $16,000,000 increase reflects mainly the acquisition of Karma for $120,000,000 while we have started to build Hounde in April 16.
During the period, we have also divested YUGA. From 2016 to 2017, the increase is mainly due to the buildup of Hounde, which amounts to $470,000,000, which is the initial, price of acquisition plus the 30 the $330,000,000 for the plant, while ity has also started, with $70,000,000 invested in Q4 'seventeen. So during the period, we have also divested Enzema. So in 2018, the increase is now due to the investment, which totaled $276,000,000 at the end of September. So, one can note as well.
So, this is the main use of our capital employed. Can see as well that the working capital and the other balance sheet items are quite low compared to the rest So adding on that, now it's important so to track our return on capital employed and show to our shareholders what we are able to achieve once all the project will be online. So you see that in 'fifteen, so the capital employed is here is calculated as the EBIT, which is adjusted from one off items like the M and A and acquisitions, but also the impairment test, and is divided by the capital employed that I just mentioned. So you will notice that in 'sixteen, we have a strong return, 13%, a strong increase, particularly linked with the performance of Agbaou and Ity. And in 'seventeen, it decreased mainly because we have the all the investment of Hounde, but only 2 months of production.
If I have to annualize the result of Hounde, the return on capital employed in 'seventeen would have been as well around 12%. So, with Hounde and 'eighteen, our coming online next year, the objective is to increase the return on capital employed and the target for the group is returned 20%, which is now the objective for the whole group. Returns, and internal rate of return above 20%. And as Sebastian has mentioned several times, the paybacks are below 2 years. The last thing about the management of the capital employed is the working capital.
You've seen that the working capital is quite low, and it has been almost around 0 in 'sixteen 'seventeen. And it has increased since the beginning of the year. As I, as we come in during the third quarter on this call, This capital this working capital is going to decrease probably by theendoftheyear. In the 4th quarter, the 4th quarter is generally strong and we use our stockpile that has been, that will be, that has been, that has been done. So, this is the effect for the fourth quarter, but structurally, I would like you to keep in mind that our working capital is going to increase in, in next year.
So let's see each of the components. For the receivable, the item normally fairly shore term and relates to the timing of gold sales. And in addition of that, so it's just pure cash that is generally cashing very rapidly. The only thing with receivable is the fact that, the VAT recovery in some countries and particularly Burkina Faso takes time and we are struggling as other mining company to recover this VAT. So the action that we have taken here is that we are trying to sell the VAT to the bank in order to cash in the VAT recovery very early.
On the inventory, there is a buildup of twofold First, we have increased inventory, which is due to project coming online, like Karma, Hounde, and it will continue to be the case with ETCL year because we need to build some inventory for Ity CIL. The second and more important, it is structural in nature because it is linked to the optimal mine plan and the stockpiling strategy outlined in the feasibility studies. So for both Hounde and Ity CIL, foresee some stockpile build up in their 1st years to process higher grade material. So while this while this ultimately give us a better cash flow. It also means that the working capital will increase.
Lastly, the payable, this item is more erratic and it's a mix between the supplier for operation and the supplier for the gross project. So as the project will come to an end, the supplier are going to decrease And the structural actions that we are taking here as well is that we are trying to never negotiate the terms with our key suppliers in order to maintain this level. The second layer, is the net debt management. So aside from looking at capital employed, This slide is interesting because it highlights all the investments we have done and finance. In total, we have invested 940,000,000 2016 and this amount should be close this amount should be closer to 1,000,000,000 once the TCIL is completed next year.
As you can see here, in that, what our full chart, the main components are exploration, which is mainly brownfield, and this is difficult to calculate a direct return on capital employed for exploration. However, we have, of course, complete example of value creation, as Patrick has mentioned before. For example, in, on Ity CIL, we have spent $15,000,000, which ultimately added 1,000,000 ounces of reserve, and that impacts the project and creates about $300,000,000 value. At Hounde, we spent just over $10,000,000 on Kari Pump, which offline 1,000,000 answers, and we expect a similar increase in the value of the project. So it goes on and the lease goes on with Fetekro that Patrick just mentioned.
So while that these investments take a big longer to hit the return on capital employed line, this, they ultimately are a key driver to maintain a strong return on capital employed in the mid and to long term. The second thing is that we have invested 1,000,000 in non sustaining CapEx that relates to things like the secondary crusher and Agbaou, the relocation or the pre stripping we are doing in many mines. So that typically provides immediate return. The largest portion after that are the 2 projects, Hounde and UT. And last, we spend about 60,000,000 to buy the 20% stake we have in it.
So looking forward, we can see that the largest investment for next year is the remaining to $70,000,000 spent to spend at Ity CIL. This means that we would have completed the large CapEx program. How we have financed that This slide shows the main, financing source. The main one, one of the key financing sources 1,000,000, which comes from equity injections with Lamanca being the largest contributor with its anti dilution, right? Then the equipment financing for $100,000,000, then the sale of YUGA and Nzema, $60,000,000.
And, we have finance, the rest come from our debt drawdown $270,000,000. And of course, we have also self financed all these those investments for 210,000,000 from the operation of other period. As we have seen, I've been investing significantly into the business. And where we are dependent from the free cash flow generation to limit debt drawdowns, our strategy has been to put in place a gold program during investment phases. The idea is not to put us freeze the company when we significantly invest For Hounde, for example, we took, we put in place a caller between 12 100 floor and a cap of 1400.
And this has finished last year. For Ity CIL, we have been able to get much better condition with a floor of 1300 and a cap of 1500. And we have protected 400,000 ounces, which is 40% of the group production between February 'eighteen and April 'nineteen. So we benefited a bit of Hounde, but we are benefiting now much more because of the gold price dropped, with the color of Ity CIL. To date, we have done a gain of $3,000,000 and we have still 190,000 ounces in that program, which represents a net gain of $15,000,000 if we assume a $1200 gold price.
This represents an additional $9,000,000 gain for each $50 per ounce gold price decline. So the coupon code expires in April next year, And once we are in production, the strategy of the group is to remain and hedge. On this line, you can see the debt evolution since 'fourteen. So the debt was high in December 'fourteen with the starter at Bao. Particularly when you look at the gearing, which was 1.7 times at that time, after an important phase of between 'fifteen and 'sixteen to restore the balance sheet.
The debt has increased again in 'seventeen and 'seventeen and 'eighteen with Hounde and 'eighteen construction to reach today 1.8 times net debt on EBITDA. But with the gearing metrics, which remain very comfortable, as the net debt represents only 0.3 times our market capitalization. So this is a strong contrast with the buyer before I'm on share partnership. Our goal is to have a net debt to EBITDA ratio between 1.52 times during maximum, during the construction phase, and to de leverage rapidly to come back to one times, 1 CTCL will be in production. Our objective is to remain below 0.5 times net debt and EBITDA on a nominal basis.
The debt restructuring, as you have seen, we have completely, restructured our debt in 'seventeen, in September 'seventeen and in early 'eighteen to ensure the financing of our growth project. So from 8 from, we have increased the source of financing from 5 to 8 banks and then we are more diversified the source. We have lower interest rates. As you can see, we used to have a LIBOR plus between 375 bps We have now lower interest rates, 3% for the convert plus a reduced, spread for the RCF. So that helps to save about $5,000,000 per year with the road mover of maintenance cost.
The liquidity is also better when we know that most of our projects are now financed. And last, the maturity has improved from March 20 to September 21 for the RCF and to February 23 for the bond. Looking forward, we have also significant source of financing to fund the remaining Ity CIL gross CapEx, As you can see on this page, when looking at the liquidity sources available, $213,000,000, when we add the proceeds that we expect from Tabakoto and Nzema cell, which are $80,000,000 and the remaining equipment financing for AT CIL, Of course, we are well funded to finish the financing of the Ity CIL. Last point is the equity, and I want to reiterate our conviction to contain equity insurance. As you can see on this, as you can see on this page, despite all the investments, we have contained our equity insurance not to dilute too much our shareholders.
So we have today 108,000,000 shares in circulation with very little dilutive shares as we have today, no stock options on the 50,000 old stock option plan and some PSUs that we are coming, but can be paid either in cash or shares that represent an equivalent to 3,000,000 in shares. The maximum shares that we can issue today is 200,000,000. And so, the only question about the dilution is, how are we going to manage eventually in the long term, the convertible bond which is not in the money today. Looking at that chart that probably some of you know, our convertible bond has the optionality to be reimbursed either in cash or shares or both. So you can see 2 scenarios.
The first one is the dilution if we are reimbursed all the shares and then, needs that the price to reach 20 Canadian dollars per share, and that it creates a 13% dilution. The second one, we can also choose to reinforce the capital in cash which is $330,000,000 and the rest in shares. And so you see the dilution, which increased with the share price but remains between 1.3 percent dilution for our share price moving between $30 $40 per share. And it reaches 6% for $50 per share. So the dilution on our capital is quite limited if we use that strategy.
And of course, can decide to pay everything in cash. So the perspective of dilution linked with the convertible bond is very limited. Before the conclusion, I would like to come back to also appoint and the discussion we had with some of our shareholders regarding this convert. And one question which has been quite often raised, which is, does the conversion price cap the sharp price evolution? So there is no empirical evidence about this and it's a long debate on, but I wanted to show that on this page, the share price evolution of 68 company of similar market cap, which issues converts since 2015.
The graph shows over time, so, over time, the stock price performance of convertible issuers, which runs the gamut So analyzing closely the underlying data ensures that the stock performance is related to business performance and market sentiments and not to convertible issuance. While the share price decline in the 1st days of our loan period, there is no correlation. So to conclude, as I have showed you, our balance sheet management approach is strongly linked to our capital allocation decision. It's the constant tradeoff between a hierarchical order, which is first to finance to 1st, to finance the development project. 2nd, paying down the debt in order to rapidly deverage the balance sheet.
3rd, pay dividends, as Sebastian was mentioning, once we are on track for the de leveraging and once we have some capabilities to sustain the level of dividend that we will pay. And last and one appropriate looking at bolt on acquisition, if it makes sense for the portfolio. This is much more about bolt on acquisition that are paying shares. Never reading cash, which is the use of and we use cash generally to make specific acquisition like exploration license or to increase our stake in some key assets. So this is the our capital allocation strategy.
So thank you very much, and, I'm ready to answer your question, if any.
Any questions? Great. So with that, we'll conclude with Sebastian's closing speech.
Thank you I'm amazed that, you know, you haven't disappeared or fallen asleep. So, key takeaways, 2 minutes before drinks. Burgundy, Dan? In the meantime, I check, it is Burgundy. So I'm lucky.
So key takeaways. I hope you understood why we like West Africa and why I think you should, whether it's in endeavor or others, you should invest in West Africa and, you shouldn't be afraid about investing in Africa. We try with the team also today to in our turnaround strategy and where we were in meeting the different targets that we had set, two and a half years ago. We invested close to $1,000,000,000 in the business, but this was to prepare the right portfolio in order start generating a strong cash flow and be able to bring this next phase to focus as Vincent said on return on capital employed cash flow and also the right capital allocation for the business. We've been delivering so far along the 4 pillars that we've been working on.
Operational performance and short term, you saw our guidance for 2018. We're on track to deliver high end of production and low end of the all in sustaining. Project. And thanks to, Peter and his team, you know, we are ahead of schedule, 2 months ahead of schedule, and, we hope to have 1st gold pour at Ity at the beginning of Q2, with another strong success for Pori for the team, 4 in a row. Exploration.
I think, you know, Pat Hick went into details why we are so excited about exploration, discovery costs at $13 per ounce. And already 4,200,000 ounces indicated resources in 28 months discovered along our 15,000,000 to 15,000,000 ounce target for the 5 years. But also, key success at Agbaou, and I think that at Hounde, sorry, and I think that Carrie and the carry area is a game changer for Hounde, as well as you will see, hopefully soon, with the announcement around, La Plaque for Ity that we are committed in delivering and ensuring that our 2 flagship assets Hounde and Ity have 250,000 ounce plus annual production over 10 year and below 600,000 dollars, $650,000 all in sustaining, ensuring that Endeavour will be in a position to generate in a strong cash flow going forward. Last I'd like to say that, I'd like to thank my team, not only the executive, which are here in the room, but also all the men and women's that we have on-site and, have been working hard over the last two and a half years, in making this turn around. You know, for me, it's, yeah, it's a privilege and I'm very proud of this team, what they're doing.
And I think with them, can continue to achieve in our new targets. I couldn't stop without saying thank you to Martino and his team, for organizing and being on time for concluding this day. Thank you, Martino. I know that A lot of you have been telling me over the last months is that I probably have the best IR team. So, if you have any further questions, Martineau open night and day.
So feel free to call him. He's, he's still there. Last, I wouldn't conclude without, thank you, all of you, for attending, whether today in the room or also through the webcast. And I know that we have a lot of connections and people that have been following this webcast and sending me SMS saying that they agree or disagree on this and this So, it's good to see that, we've been followed. I think that, you know, a lot of you have been, you know, strong supporters of Endeavor, And, I know it's not easy, in those market environment.
We're not growing cannabis, but we do believe that we can provide good returns to, to shareholders. And I think that we need to stick to fundamentals. And at the end of the day, the market goes back to fundamentals. And I think we have, all the features with Endeavor. To deliver the key targets and ensure good return to our shareholders and for our investors.
So, again, Thank you very much to all of you for attending and supporting us and drinks on me at the bar in the lobby area. Thank you very much.
Thank you. And for those, that code check, you can leave your code here and then come back and get them afterwards. So you can applaud slash it now. Thank you.