Thank you for coming to our first Toronto Investor Day. Here with me today are Sébastien, our CEO, Patrick Bouisset, our Head of Exploration, Peder Olsen, Head of Projects, Vincent Benoit, CFO, and Morgan Carroll, Legal Counsel. Just to explain the format before we start, we'll do a first session on West Africa insights, to be able to share with you a few insights on why we're so keen on West Africa. Sébastien will do a CEO introduction and update on our strategy, followed by an in-depth view on our four key pillars, which are operational excellence, project development, exploration and balance sheet management. In terms of Q&A, I'll prompt at certain times during the presentation sessions for Q&A. Please hold off till then. You would have all received some big, heavy bags. In there are two presentations.
Rest assured, we'll only present one, just 400 pages. We'll go quick. On there, for those more electronically savvy, there's also a 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, at 1:55 P.M. precisely, you'll all get a text message, not from Endeavour, but from the Canadian government apparently. They're testing mobile security, just go on and turn off your Wi-Fi for that. With that, thank you again for coming, and I'll pass the word to Sébastien.
Thank you. Thank you for joining. I know that the market has not been great, it's good to see that there is still some believers in the gold space, and in particular in Africa. With the team, we decided that we need to embark into a new story. The best way was probably to present it today to everyone. Instead of continuing with Endeavour Mining, we're going to now go for Endeavour Cannabis. You can see that next to our mines, we're now trying to grow cannabis. 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. We are all happy. Is that good?
Yes.
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 promised land in terms of discovery and also a nice environment to operate. Given that my dear friend Mark Bristow is now moving to Toronto and leaving Africa, probably to take care of more important issues across the world, particularly in Nevada and in Toronto, I thought that I would start talking a bit more about West Africa. Why West Africa? The first thing is when we just go back one sec on where we are operating, you see that since day one, we've been trying to present ourselves are highly focused in Africa. We're really targeting West Africa, not the whole continent.
Also at the same time, diversified over several countries. 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. 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. If you look at the top gold producers by countries or regions, you can see that China is the biggest one. Second is Australia and Russia, and the third one is West Africa. What's interesting when you talk to Portfolio Manager about where do you want to invest, if you want to invest in gold equities.
A lot of them will tell you, "Well, I probably can't invest in China." It's not easy. Probably difficult to invest in Russian assets. Therefore, the two biggest regions are obviously Australia and West Africa. This is why I strongly believe that anyone that is looking at the gold space has to look at West Africa. 81% West African gold production over the last 15 years and the fourth 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.
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. Where are the areas that companies have been really investing in exploration? When you look at just last year, for example, $385 million exploration budget was spent in West Africa, which is the third largest investment area for exploration after Canada and Australia. Over the last 110 years, it's $5 billion that has been spent in West Africa. Out of those $385 million that were spent last year, about more than 10% was spent by Endeavour.
We have a $40 million-$45 million exploration budget across West Africa, you can see that represents more than 10% of the total exploration budget 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 five times less than the U.S. We are here on a territory which is five times smaller than the U.S., and where we're spending more than in the U.S. 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 in exploration. 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 million ounces of M&I discovered, far ahead of other countries. It's been the number one discovery region globally for the last 10 years, and that probably explain why people want to invest in exploration in that region. 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 ounces. If you take just the example of Endeavour, I think the average 4 million ounces of indicated resources we've discovered over the last 24 months are above 2 grams per ton.
Mostly oxide, not refractories, we're not talking about low grade. This is why also it makes this area so attractive. Now, what are we looking for in West Africa? That's, for someone like me, which is not a geologist, I need sometimes Patrick to give me a bit more lessons on why do you want to spend time on Côte d'Ivoire and Burkina Faso and why not on Sierra Leone, for example, where there might be some interesting stuff. Well, the reason is simply because what you want to target is these green spaces, which is the Birimian Greenstone Belt. This is where your chance to discover large deposit and gold is important. What you see, and that's interesting, and I've been saying that more and more over the last three 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. Look at Mali and Ghana size in terms of Greenstone Belt. It's pretty small compared to Côte d'Ivoire and Burkina Faso. Why? Why, simply because you need to go back to geopolitical environment. For maybe close to 20 years, Côte d'Ivoire and Burkina Faso were in a complex environment, and you would have to be very brave to do exploration in Côte d'Ivoire and in Burkina Faso, while Ghana and Mali were much more stable. In fact, all the first exploration waves were done in Mali and in Ghana. When you look at Burkina Faso and Côte d'Ivoire, you see that more than two-thirds, in fact, of the Greenstone Belt is lying over there.
This is the promised land, and this is the area where you need to focus your exploration strategy. Confirming and looking at in percentage, when you look at the Birimian Greenstone Belt, you see that about 60%, so close to two-third of the Greenstone Belt lies in those two countries, Côte d'Ivoire and Burkina Faso. While at the same time, you see that Burkina Faso and Côte d'Ivoire represent only a quarter of the total production. You see the discrepancy between the two. This is where you have the most opportunities, and this is where you had less discoveries in the past. This is linked to the fact that because of the geopolitical environment, people didn't invest there.
If we look at expenditures and exploration investment over 2017, you see that close to 50% of the exploration budget in West Africa has been now redirected to those two countries. $190 million spent in exploration in Burkina Faso and Côte d'Ivoire. What's interesting, obviously, for us is that with a budget of $40 million-$45 million, you see that Endeavour represents close to 25% of the total exploration budget in those two countries. Looking at also why Endeavour has been specifically focusing on French West Africa. 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 greenstone belt, clearly Côte d'Ivoire, Burkina Faso and Mali.
More importantly, all those countries that we're targeting are part of the same economic zone, which sometimes people didn't see. They are part of the same economic zone. What does it mean? It means that you have common central banks for eight of those countries. You have a common currency, which is completely attached to the euro, which gives you stability. You have also fiscal and monetary policies that tend to be aligned through the guidance of IMF and other world institutions. 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 think a good example is what we've seen 50 years ago with the European zone.
Clearly, it's been giving stability to the area just because progressively having the same currency and aligning progressively fiscal terms has given stability. This is what the French West African countries, through this economic zone, have been doing. This is why we believe there is probably stronger stability around those countries than in the rest of Africa. You see that in fact, also through the taxes and royalties 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. 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. As the country develops, they're trying to align progressively those mining code with the other countries around them, but also with the rest of the world. When you look again at corporate tax, mining royalties for those countries and compare to other large regions, they're pretty much aligned. The other thing which gives us also comfort is because those countries are under supervision of IMF and the likes, they can't go crazy. They can't start doing crazy things. 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 have been built as part of their membership into this economic zone. Stable political environment.
Yes, I do believe that those countries, and in particular the three that we've gone through, have a stable political environment. Whether it's Burkina Faso, Côte d'Ivoire, Mali. Mali, we just had recently some new presidential election, went well. President was reelected. He has two terms, so this will be his second and final term. Burkina 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, was thrown away by the streets. I think that recently, the country has shown its ability to maintain this path through democratic elections. Côte d'Ivoire. Côte d'Ivoire has been highly successful also in putting two consecutive terms with the same president, which has given strong stability to the area.
When you go back to GDP growth, last year GDP growth for Côte d'Ivoire has been 7.8%, but the three previous years, they were above 9%, which was the fastest growing country in Africa. Putting overall a pretty strong, stable environment over there. What do we see differently from the rest of the world or from CNN? When we're talking with investors, what are we seeing differently? Well, I think that what we tend to repeat, and particularly in the U.S., with U.S. investors, is the fact that Africa is not one country. Africa is 57 countries. Sometimes when you have something happening somewhere in Tanzania, 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's a bit like, look at what's happening in Venezuela. Ooh, must be the same in Canada.
Come on. It's just not the case. Yes, some of those countries went through those difficulties over the last 50 years, so it's not like they have a track record of going smoothly like Canada and the U.S., but 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. I think we see that more and more. The other thing that we see, and I don't want to point fingers, is the fact that some of our peers had some difficulties in some countries. It's not because some of them had failures that we are failing. I think we're showing, and a few of us I was having dinner with Clive yesterday. A few of us are having good success in West Africa.
It's not because some are failing that all the companies should be thrown away and they are all behaving the same and they are all failing. No. It's not the case. 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. We'll try to show during the seven hours and 1,224 slides that this company is one of them. Security has been obviously a recurrent subject that we've been addressing and on which 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 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. I think, again, that some companies know well how to operate in those environments. We're not afraid about security for our people and for our assets. In fact, when you look back at what are the biggest threats for investors when we talk about security issues in West Africa, usually the first one that comes up is a coup or dramatic political change. This is not anymore the flavor of the day in West Africa, I can tell you. In Burkina Faso, after the first democratic election, one general tried to do a coup two weeks after the election. It lasted one week. 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 path." After one week, the coup was over, and the president was brought back. Things that we've seen in the past, and in particular in that region in West Africa, I don't think will come I'm 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. I think the fact that Compaoré in Burkina Faso was thrown away by his own people is a good sign that people don't want that. The second thing is terrorist attacks. 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 what terrorists are looking for is to destabilize governments. They're not looking at destabilizing mining companies. If you look at the history, in particular over the last five, seven years, they haven't attacked any of our operations. That's for different reasons. The first one is, if terrorist wants to gain popularity with the population and with the communities, if they start by killing the goose, it's not going to work. Because our communities, their life is mostly about the mining operations, the subcontractors, and all the life which is around the mines. If you start attacking one of the mines, I can tell you the community is not going to be very happy.
The terrorists who are trying 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. It's really attacking armed forces, gendarmes, soldiers, because they want to destabilize the government. When I look at what's been happening, I think we had one terrorist attack in Côte d'Ivoire. We had two in Mali. When I mention Mali is Bamako and south of Bamako. Obviously, you've got a lot of terrorist attacks in the north part, which is an area where no one's going, no one is operating there. If you look at Burkina Faso, which has been lately probably a subject of questioning and fear. There was about five attacks over the last 12 months. Those five attacks were spread over the country.
Sometimes I ask myself, where do I feel more comfortable in terms of security? Is it in London? Is it in the U.S.? Is it in Burkina Faso? Well, think about it. I live in London. I have kids going to school. We had about four terrorist attack over the last 18 months just in London. Where do I feel safe? On our site in Burkina Faso or in London? It's a key question. At least in Burkina Faso, we usually know what they are targeting. In London, we don't know. Look at what's happening in the U.S. 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 Mali and Niger, but more recently there was an agreement to station armed forces, French armed troops, in Burkina Faso. The Burkina 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 terrorist cells. The other aspect is the U.S. also are sending more and more troops. We know that Canadians are sending also some supports there. There is a willingness across the international communities to bring the right support to ensure the stability of those countries. Why are we so bullish?
Just to recap about West Africa, I would say again, first because it's the fourth largest gold producing region globally, and the second one with investable region after Australia. Second, because it's the third global exploration budget for 2017, and it's a continuous trend. 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. West Africa is a key one. It's the first discovery region globally over the last 10 years. Yes, it's an interesting region and this is why we're focusing so much on that region. What is Endeavour doing there? Obviously, we're not the only mining company operating in West Africa.
What is probably unique about us, compared to some of the names that is listed there, is the fact that we focus 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. Secondly, across multiple assets, but also across multiple countries. This is probably why it's so unique with Endeavour to have this geographically focused, but at the same time spread over multiple mines and multiple countries. If you remember what I said about Burkina Faso and Côte d'Ivoire in terms of potential. If I can move to the next slide. No? Yep. Just remember that Burkina Faso, Côte d'Ivoire are the two most highly prospective countries in West Africa, and these are two countries where we have leading position.
In Burkina Faso we'll be this year the second largest gold producer after Nordgold. In Côte d'Ivoire we are the largest gold producer with Ity and Agbaou. Clearly some key assets in key areas for the future. Questions. We'll now take it for questions. Just put up your hand if you have a question. Questions on West Africa or countries or how do we grow cannabis over there? How much water consumption? Okay. Michael.
Sébastien, are you able to expand on the French army and forces and their commitment in a little bit more detail in terms of what you understand of support that might be there as needed?
First in order to anticipate what was in particular happening in Burkina Faso, we've been strengthening our own team. We hired 12 months ago as head of security for the region for Endeavour. We have in France what we call the secret service called DGSE. Within the secret service group, you have one specific department, which are the ones which are turned over active operations. This department is led by four guys, and we hired one of them that over the last 20 years have been operating mainly in Africa. Georges Davoine is now heading our security in the region for the last 12 months, and he has been helping us progressively to strengthen our overall security group.
More importantly, given his background, to ensure that we keep strong tie with the French intel, all the French embassies, and being able to be ahead in terms of overall information. Because he's a military also by background, he has strong contact with all the French troops which are stationed in the area. 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 Barkhane force deployed in North Mali. That was back 4 years ago when they had to intervene to stop the terrorists and the rebels coming from the North Mali and trying to get up to Bamako. I think it was a successful operation. They've been maintaining all the troops over there.
Since then they've been expanding also the troops in other neighborhood countries, in particular in Niger and now in Burkina Faso. What we see is the fact that they've brought a lot of drones, planes, to increase the intel in the area, and being able to bring also much more support to all the local countries. Basically through 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.
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 and in Niger in particular. Last time I went to Niger, where I'm still a advisor to the President of Niger, I saw that a big building under construction, and I asked the guys, "Who's building such big stuff?" They say, "Well, it's the new U.S. Embassy." Say, "What. New U.S. Embassy. But it's huge." Said, "Yes, but they have a lot of troops." Those are two countries which have been 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.
Great. We'll take our next question. No one? Okay, perfect. We'll try to stay on schedule into our next presentation, which is operational excellence. Sorry, three turnaround.
Still me, Martino.
Yeah
Someone asked me.
You
Again? Okay. Okay. Just wanted to come back on a quick our three-year turnaround story as we are approaching towards 2019. If we recall. Don't know which one works. This one? Yeah. Going back to when I joined Endeavour back in the end of 2015, we set an ambitious strategic plan for three years with the objective of where we want to be by 2019. Where we want to have an average all-in sustaining cost below $800, 10-year plus mine life, and production around 800,000 oz. The objective was not a specific number on production, but just to say, okay, we are strong mid-tier gold producer. We're not a junior company. The key there was really to move down the all-in sustaining cost and to increase the mine life and the visibility.
The reason for that is because I truly believe that to create a sustainable business, you need to be able to address, in terms of capital requirement, 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. There 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, 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. Therefore, you need to generate enough cash flow so that you can properly allocate to those four items, which mean that as long as you don't have a base 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 four of them, so I need to sacrifice some of them." The reality is that shareholders have usually been the one sacrificed. If you generate even less cash flow than that, exploration for the future has been sacrificed.
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 four. That's the only reason why you will sustain your business. Clearly, when we joined and I joined Endeavour, the objective was $922 all-in sustaining too high. In a gold price, which is highly volatile gold price environment, you need to ensure that even if it goes to $1,000, you'll be able to continue to generate cash flow. Below $800, for me, is key. Mine life is important because you want visibility. Four years visibility, who would invest in a business that has four years of visibility? We all know that if we have four years, you know that the next year you're going to have to think about closure or selling the assets.
No one's going to bet on your company for the long term if they know that you have to close the mine in three years time and prepare the plans or sell the assets. You need at least 10 years mine life to give visibility to it. 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 two-million-ounce producer because then you need to renew two million ounces every year. Being able to renew two million ounces of depletion is at least two million ounces of reserves, and we're looking at Patrick finding two million ounces of reserves every year. Patrick is going to find this year, two million ounces of indicated resources that might turn in 1.6 million ounces of reserves.
Two million ounces of reserves, that's tough. That's not easy. 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. In order to address, just on the previous slide. Thank you. I don't know if we can fix this one. Sean, can you try and fix this one? Thanks. What have we been working in terms of how to do this turnaround? Well, we've been trying to address three, four pillars. The first one is operational excellence, and I think it's important to keep delivering on our promises, guidance, meeting guidance. I think that over the last three years, quarter after quarter, we've been delivering our guidance.
Project development, that's something that Peder will comment on, I was very impressed when I joined Endeavour, is finding a highly skilled construction team that Peder is heading today. I think they've demonstrated their capacity to build on time, on budget, and a lot of time, in fact, ahead of schedule, our mines. They started with Nzema, then they built Agbaou, just completed Houndé last year, and now in the phase of nearly done with Ity, which is already two months ahead of schedule, and that should be pouring first gold pour at the beginning of Q2. The third lever is exploration. It's not just about building mines, but also it's about preparing the future. I'm very fortunate to have Patrick and his team too.
Patrick has been supporting me for the last 10 years in our different ventures, this one has been probably the most exciting over the last three years, probably also one of the most successful in terms of potential for discovering new ounces. We're having a lot of fun around red wines, good red wines, French ones. We've been delivering. So far, 4.2 million ounces on our exploration strategic plan just in 28 months. At a discovery cost an average of below $13 per ounce. Yes, we're getting there progressively. The last one with Vincent and Guénolé 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 no string attached, no emotion. I don't have any emotions with mines.
Can have emotion with a good Burgundy wine, but not with a mine. 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 which are generating our cash flow, and that will help us for our future. Yes, three assets sold, two assets bought, we've been restructuring progressively the balance sheet from a highly leveraged company to, again, a leveraged company. That's because we've been investing close to a billion dollars in building up our flagships. Now we will be starting generating strong cash flow. If I can have the next Yeah, thanks. Sorry. Operational excellence.
I'm not going to come quarter after quarter, I think that 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 quarterly basis. The team and all the efforts that has been put on the operation has allowed us so far over the last three years to deliver on our guidance. 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, what about quant funds and passive funds?
I said, "Yes, we need to take care of it." I think that back in Q2, we had an EPS miss by about 0.001, while all the other targets, and in particular production, all-in sustaining cash flow, were a bit, and we were down, I think, close to 10%. Yes, we need to take care of that. We also, and I'm sure you'll acknowledge that managing EPS on a quarterly basis is not easy for the team. Martino and Vincent are scratching their heads every quarter to make sure that we're not forgetting something that we have a clear understanding of what the impact is going to be on the EPS. Yes, we need to be more cautious. We need to anticipate that. We got the lesson, at the same time, we don't want to fall into traps.
At the end of Q3, just before the press release, we said, "Okay, what do we do with the quant funds? Oh, easy. Increase guidance by 1%." 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. We're serious people, let's continue to do things seriously, and hopefully the market and investors will catch up seriously. Project development, there is a big section that Peder will go through after. I think I'll just highlight the fact that-We've been focusing on the right projects. When you look at the track record of this company over the last four years, Agbaou, which was the one previously built, Agbaou had a payback of two years. Two years.
It's good in West Africa when you're able to build mines on time, on budget, and with a two-year payback. Do you have a lot of countries and a lot of projects that gives that? Not that much. West Africa is a good environment to build mines, and I think we've been demonstrating mine after mine that we can build in this environment on time, on budget, and successful mines. Houndé was the latest, and when you look at the key elements around Houndé, yes, it's a very good asset and this is why we've been focusing $320 million CapEx on that asset. When you look at the operation cash flow of that mine this year, yeah, we're probably trending progressively to two years, two and a half years, payback on Houndé. Yes, it's an attractive mine.
When you look at what we continue to discover around, yes, I think we were right 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. Overall, when you look at what we've been building, and in particular the last two ones, yes, very attractive. We're trying to be more and more disciplined on what we are interested in. If you look from Agbaou to Houndé to Ity, yes, we took for Ity with the DFS a new key metric. At $1,000, Ity CIL project has a 20% IRR. Seems familiar to someone else. He's now in Toronto. Yes, we are able to find and to build projects that have the same type of features.
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 disciplined on what are the assets that we want to focus on. Exploration. I mentioned this lever earlier, Patrick will be doing a 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. That's what I like with Patrick, is we like to say that everyone in the company needs to bring accountability. Accountability is across the group. It's not just for operations to deliver their guidance with their budget, 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.
It's also exploration, being accountable on how much are you going to spend on exploration, how much ounces I'm going to get. I don't want to check which is a free lunch for exploration to go and drill anywhere, and we'll see whether they are successful or not. Doesn't work. Patrick gets it. He's the one that build the plan. 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 prospective. Therefore, yes, with the board, we agreed that we were ready to commit $35 million-$40 million a year in exploration. More than 10% of the whole exploration in the region.
The reason for that is because we believe that Patrick and his team are able to deliver 10 million-15 million ounces of indicated resources over this 5 years. 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. Even more than that, we've been trying to say, "Okay, this is where we're going to discover." Where we're going to discover has been mainly, obviously, on our two flagships. Two-thirds of the discoveries are expecting to come from Houndé and Ity. If you look at the recent track record, we basically have been able to discover about 4.2 million ounces in just 28 months since we launched that exploration strategy.
Yes, we are on track to deliver this target of 10 million-15 million ounces of indicated resources, I'm highly confident, Patrick will demonstrate why we should be confident on their ability to deliver so. Thank you, Patrick, again, for the 1 million ounces at Kari Pump. This one is a big one, I know that Ity is the next big announcement. I didn't say anything. Now, unlock exploration value. I think that we try to do also a few case studies. How we're going step by step. It's obviously easy when you found a 10 million-ounce deposit, then you don't have to scratch your heads. It's not every day that you find a 10 million-ounce one. I think we'll probably find one in West Africa in our portfolio.
We said since day one, Houndé 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 Houndé will be a 250,000 ounces at least producer for the next 10 years. I think that what the team has achieved in 2018, drilling 150,000 meters at Kari Pump and discovering 1 million ounces of indicated resources, again at 2.8 grams per ton, while the average grade of Houndé today is 2.1. 50% of that being into oxide, while 80% of our reserves today are in fresh, just demonstrate that Houndé has the potential to be these assets that we've been saying over the last 2 years.
That's what we like to see, that's why we are so bullish on, in particular, those two flagships. I think that when we said initially when we set our strategic plan that what we want is to have Houndé and Ity showing by 2019 that those two projects are, in fact, mines that will be producing an average 250,000 ounces each for at least 10 years. Which means that on top of this 1 million ounces that was discovered in 2016, 2017, we're still expecting to find more to continue to bring this life of mine plan to 250,000 ounces for the next 10 years. For that, you probably heard about our Le Plaque discovery, this year, which has been small and growing.
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 answers that we're requiring to see and demonstrate that Ity CIL is a 10-year mine life at 250,000 ounces. The grade of Le Plaque, 2.8 grams per ton. Yes, we continue to discover answers and high-quality answers. An interesting case study is also Houndé. If you recall my presentation back 2 years ago, I said, "Look, Houndé is a good project. This is why we're building it." By the way, yes, after year 5, you see a drop in production and increase in cost, that's because Vindaloo, where 90% of the reserve of the project lies, the grade in Vindaloo is decreasing and therefore production going down and cost going up.
We said since day one, Houndé 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 Houndé will be a 250,000 ounces at least producer for the next 10 years. I think that what the team has achieved in 2018, drilling 150,000 meters at Kari Pump and discovering 1 million ounces of indicated resources, again at 2.8 grams per ton, while the average grade of Houndé today is 2.1. 50% of that being into oxide, while 80% of our reserves today are in fresh, just demonstrate that Houndé has the potential to be these assets that we've been saying over the last 2 years.
Next year, Patrick will show it, we will continue to drill Kari Pump extensions because we see it's open all across, in particular north and west, and we have also Kari and Kari West. Therefore, we'll be investing again 150,000 meters of drilling in that area because we believe that there is another million ounce there. Suddenly you'll see that, yes, the life of mine plan that we showed initially is going towards 250,000 on plus for the next 10 years. We're not just investing in exploration on our brownfield and on just those two key projects because, 250,000 ounce at Houndé, 250,000 ounce at Ity, that's 500,000 ounce. We want to produce at least 800,000 ounce or a million ounce. We need to prepare also the future and bring the next projects.
This is why we've been investing in parallel in exploration, in greenfield exploration. You saw our discovery for Fetekro, again, in Côte d'Ivoire. Remember Côte d'Ivoire, high potential discoveries. Fetekro, very interesting one. It's just the beginning. How many meters did we drill this year? 32,000. 32,000 meters drilled only, 800,000 ounce. What we're looking at? Well, we don't know. It's a PD&E, Okay. I won't do the subtitles. Again, very interesting, 2.25 grams per ton, it's attractive, looking good. We need to work, and it will go step by step. Let's not rush. Yes, we're working also on the future into other targets than just Houndé and Ity.
Now, this has, Patrick will explain, as I mentioned, since we launched this ambitious exploration strategy, we are now at 4.2 million ounce after 28 months of this plan, it's 42%, the team is highly confident that, yes, we should be reaching this ambitious target of 10-15 million ounces of indicated resources over our five-year program. Patrick, confident? Yes. Yes? Big numbers. Yeah. Big numbers. I agree. We're big. Portfolio management, as I mentioned, I would have loved to be appointed CEO of a company that had five tier 1 assets and therefore generating strong cash flow and just being focused on doing a bit of greenfield, doing a bit of cost optimization and that's it for the next 20 years. That's not the challenge I took.
The challenge I took is taking a company with an average of four, five years mine life, close to $1,000 all-in sustaining. 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. We sold Youga in 2016, you all now hopefully be familiar with our magic box, the fact that we want our assets into this magic box above 10 years mine life, below $800, $850 all-in sustaining. All the ones that doesn't fit should be out. No time to spend on those assets. We find buyers for that. There are junior companies, or there are mid-tier companies operating at $1,000 all-in sustaining, which are happy to operate mines at $1,000. That's fine. They're prepared to pay the price.
I'm happy, in terms of capital allocation, that I'll be providing my shareholders with return on capital employed much higher by focusing on those assets. We sold Youga, we sold Nzema. 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. 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. Focusing on our key assets, and in particular Houndé and Ity. The next one, which is Kalana, that we'll be presenting in the next slides.
Yes, I'm proud to say that, 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 our low-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 the announcements from Patrick that our mines are getting to 10 years plus life of mine. We're getting to this 700,000-900,000 ounce annual production. It's not all about 2019. It's about preparing for the future and making sure that we have the right pipeline to sustain those objectives. This is why, in terms of exploration, we've been preparing progressively the next targets. Exploration targets that will move from greenfield to potentially feasibility study, construction, and then back into operation.
Once some of those mines 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. 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 completing the 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 project assets, but with no financing capacities to develop them. We basically had 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.
Two flagship assets with Houndé and Ity. Yes, we're on track, and we're pretty happy with this portfolio. Our strategic objectives are getting there, making sure that our all-in sustaining are below $800, 10 years mine life. Again, this is just to make sure that we generate enough cash flow to allocate to the four key items. Sustaining, non-sustaining CapEx is 1, exploration is 2, third is to fund our growth with project, and more importantly, start paying dividends for our shareholders. This has started to translate obviously also in our market cap and growing from a 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. Huh, Patrick? Obviously, we need to look at our share price performance.
We had a good rerating and a good share price performance over the last three years since we took over Endeavour. Obviously, significantly at the beginning, a bit less recently. I can tell you that the team has been a bit annoyed as we feel that we've been delivering progressively on all the items. 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 from both Houndé and Ity starting to come out into the balance sheets. This is probably it for me. Just conclude by saying, yes, we've been investing a lot over the last three years.
Close to $1 billion invested to bring our two flagship into production, in particular Houndé and Ity. Also with a strong project pipeline optionality, which is there, and still a lot of exploration upside. Starting in 2019, there's no revolution or no. I'm not going to buy Goldcorp or Newmont. No, I promise. I'm not going to buy also high-cost companies. We're just going to continue to be highly disciplined. You know, and for ones that have been following us, we have from time to time discussions with companies, but we are highly disciplined. We didn't do Acacia, and we're happy with this. We're not starving or dying for doing a transaction. We don't need to.
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, Sébastien. We'll now turn it to some questions.
No, it was clear. It was clear? Thanks.
Owen.
Sébastien, I have a couple of questions for you.
Okay.
One, if you look at the exploration success at Agbaou, really haven't added a lot of ounces there. Looks like it's a short mine life. Costs are going higher. When does Agbaou potentially move out of the magic box?
It's a good point. We know that Agbaou at some point, will probably move out of the portfolio. It's not for the short term. We've got in particular for the next three, four years, we've got a good plan there. We're happy to stick with this asset. Agbaou has been a high success for Endeavour. When you look at how much ounces was produced there, we're twice above the reserve case in the feasibility study. We've been very happy. It's clear that it's been a bit the left child on the side over the last two years because the team has been focusing in particular on exploration a lot on bringing the right answers for the Ity feasibility study and then for Houndé, 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. We're working on Agbaou, and Patrick 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. It's not any more a flagship asset. It was three years ago. Now it's Houndé and Ity, but it's still a good asset. It's generating good cash, and we're happy to have it. You're right. One day Agbaou, unless we find significant things over there, will probably come out of our portfolio like any of the other assets.
Great. Thank you. I think Michael you had a question.
Yeah, thanks.
Sorry, Michael, you had another question?
Yeah. You have a very large strategic shareholder that's been openly talking about M&A in West Africa and have recently invested 30% in Golden Star. How do you manage the fact that you have one large shareholder actively pursuing M&A with yourselves, now Golden Star in West Africa? Is there a gentlemen's agreement out there or how are you going to sort of play that game? It's an interesting dynamic because I was under the understanding the money was going to go to South America or Central Asia, but to see it end up in West Africa, it does show that there's a little bit of competition now.
Are we on record? Yeah, I need to be cautious.
Yes.
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 Endeavour, and now going to Golden Star. I think we mentioned it, discipline around M&A, that's what we're doing, and that's what we told our main shareholder. Naguib Sawiris has been always very ambitious in whatever businesses he's been in. He was the sixth largest mobile operator worldwide. He has ambition for us in the gold space and in particular in Africa. He want us to continue to grow. At the same time, he understands that we need to grow, not to be the biggest, but to be the best.
I think this is a disciplined approach that he understands, this is why La Mancha went for Golden Star and not Endeavour. We said as Endeavour, we're not interested by Golden Star, not because we believe that Golden Star is not a good asset. There might be an investment case for that, and La Mancha had one, but it was not the investment case for Endeavour. Again, when you look back at magic box, Golden Star doesn't fit into that magic box. We have some clear criterias on what we are interested in. If there are some assets that would meet this criteria, we'll look into it. If not, it's not for us.
I think that our main shareholder totally supports that, this is why he decided to make this move on Golden Star through his own vehicle rather than doing it through Endeavour. Nothing controversial I saw? Okay.
Yeah, Sébastien, on the portfolio management, the magic box. There seems to be a little bit less emphasis on the number of mines. I think in the past, you guys stressed maybe six to eight as the optimal number. What are you guys thinking right now is the ideal number of mines to manage?
I still think that six, seven mines is the maximum. It doesn't mean we need to go to six, seven. It means that I wouldn't go beyond six, seven mines. Seems to be the magic number. I saw that AngloGold also is looking at seven mines. I think we are realistic about what we can manage as a team compared to others, because you want the right attention to those mines. We currently have four mines now that Tabakoto is nearly out. Building another one with Kalana at some point, that's overall five mines, I think that four to six mines is good. What we need to ensure is that those four to six mines are well-spread over different countries. Again, for me, it's important. I don't want five mines in Burkina Faso. I don't want five mines in Côte d'Ivoire.
I want to make sure that we have those mines spread over several countries. On top of saying multiple mines, up to six, seven mines, I said multiple countries, in particular, three countries or more.
Okay, 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 pit or underground?
No. The group has been operating Tabakoto mine, so we have the skills. Whether we are the best underground operators, obviously, I wouldn't state that, but we're not afraid of. You find the right competencies when you need it. Open pit, underground, it's clear that it's open-pit mines mainly today because it's brand-new mines. We've been able to focus on somehow good-grade, shallow, open-pit mines, which is even easier than looking at underground mines. If tomorrow either we need to go to underground on one of our operations, or if we feel that there is something attractive as underground projects or underground mining company to buy, we'll look into it for sure. At the end of the day, it's all about returns and what we can generate out of it.
Thank you.
We'll take our next question. Oasis.
Sébastien, just on Kari Pump. Obviously, great discovery. You guys have done a good job improving resources there. You're at 1 million ounces, and obviously, like you showed on the graph, that production profile starts falling off after year four. When do we start seeing, or what do you guys need to see before you can start adding Kari Pump into your mine plan? When does the market get word of that?
We're expecting to get Kari Pump into reserves next year. We're not in a rush. We're just finishing the first year of Houndé. We have another three years before we see that thing going down. The objective would be, at the latest, by 2021 to have Kari Pump into the life of mine plan. Obviously, if we can bring it earlier, given the high grade of Kari Pump, we'll do it. We just need to have the right permitting around Kari Pump. Which we're looking at also a short way would be to be able to include Kari Pump into the Bouéré permit or into the Wendelou permit, 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.
That's the subject that the team is working on in order to bring Kari Pump as quickly as possible into the life of mine plan.
Is there a plan then to also, depending on how big Kari Pump gets, depending on that, are you looking also at expanding the plant as well? Or right now, let's just take it a step at a time?
Right now, it's not just based on Kari Pump. It's not the objective, because we believe that with the numbers at Kari Pump, it justifies the fact that we will be able to have Houndé at 250,000 ounce-plus for the next 10 years. The objective is not to bring down that life of mine to seven years by increasing the capacity. Given that Patrick is putting, again, 150,000 meters drilling program on the Kari area. If Patrick and his team are as successful that they've been this year, if you start adding another 800,000 to 1 million ounce again in that area, well, then you probably have to think about what's the right size for Houndé going forward. We know that, and Peder could elaborate on that, but we tend to have a lot of flexibility in the construction and the design of our plants.
We know that it's pretty easy and straightforward to increase the capacity. We would be looking at less than $50 million CapEx to increase by 50%, 70% the capacity at Houndé. It's something which is easy to do. We just need to make sure that, again, capital allocation discipline, that that is the right thing to do going forward.
Thanks. Pass over to Mark.
Sébastien, one last for me, then I'll stop asking questions and enjoy your Burgundy wine you're going to serve us later. Just on the dividend, what do you think is a meaningful dividend you need to pay? What should be a meaningful dividend given the assets you have? Number two, 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. Given the volatility you see when you miss earnings by $0.01, and again, the market doesn't look at millions, it looks at cents. If you had 1 billion shares, no one would care if you missed by
Yeah
You don't. Why would you even look at a buyback here?
Sorry. The buyback was a joke because last night we had dinner with Oasis, I was with Clive from B2, He was hammered by investors saying, "You should buy back your shares." There had been a long debate during the dinner about whether he should do that or not, and he was not very enthusiastic about the subject, but looking into it. It was a funny discussion. This is why I was mentioning buybacks. We're not into buybacks. As you mentioned, we still have a liquidity issue also 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. We all know that you don't want to do a dividend just for the sake of announcing a dividend. It has to be significant, but significant and sustainable. Sustainable means that you are able to continue to address the four allocations of your cash flow that I was mentioning. You don't want to put a dividend that will basically make you unhappy in your capacity to allocate to sustainable CapEx exploration and growth construction, growth projects. What's the relevant numbers? I think you tell me, but I think above 3% yield is something that we should be looking at. Again, too early.
We need to get Ity into production and demonstrate our ability to regularly generate strong cash flow so that we can get there.
Great. Thank you. I think in the essence of time, we'll take a five-minute break and then start into the next session. There'll obviously be more time for Q&As a bit later. Thanks.
Right. Back to our growing cannabis, but I can't see the plants here. Where are they? I mean, we should bring some samples. Okay. Quick discussion around our different levers. 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 the construction side, in particular Ity, and also on the exploration side with Patrick. I think most of you most know our assets. I just want to highlight a few case studies. Then I'll move forward on project and exploration. First of all, what do we call operational excellence as our first pillar? Well, we've been defining operational excellence around basically four elements. First one is hands-on management.
Second is leveraging geographical synergies, 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. I think this has been translated through the fact that over the last five years, Endeavour has been consecutively meeting guidance every year, reducing all-in sustaining costs and increasing production. In terms of hands-on model, I think we have with our key operational people being based in Abidjan, this is a pretty unique setup. Our head of exploration, Patrick, chief operating officer, head of construction, Peder, they're all based in Abidjan, which is the best way to be as close as possible to operations. They are not based out of Perth or Vancouver. They are in Abidjan.
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. When you look at, in fact, our map, we have from Abidjan, all our sites are between one to three hours maximum flight time. We've been progressively building airstrips on all our mines. It's getting very easy to access for any of our guys to sites, whether they are expatriates in roster or whether they are management, including myself based in Abidjan or in London, to go and spend time and efficient time on-site. It's also very important to spend time over there. Some investors have been telling me, "We like Endeavour because you've been operating successfully in that region." 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-site. Some of you went to the Semafo visit. I think it took eight hours to go to Boungou. If you had to do that on every roster and as management, if you had to do that every time, what happens is you decide quickly that you don't want to go and you'd rather do a conference call or a video conference call. What you want to make sure is that your people, and in particular, your management and the key technical people that you have, 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. 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. 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. You need to have easy access to each of your operations, and therefore, having the team based in Abidjan and being 1 to 3 hours away from each of our operations brings a lot of satisfaction and much easier in terms of managing our performance. The other thing is being able to have the right technical experts. 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 Abidjan with the right technical support that can work across the mines. If you're a single asset company, you're not going to bring experts in the different fields. 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 for all those mines. It helps a lot for us to have this strong technical team that is able to work across the group to improve our performance. To come back to Dan's comment on Agbaou, I just want to give a quick case study on Agbaou. Agbaou was built in 2013 by Peder and his team ahead of time, two months ahead of schedule. Commercial production was in January 2014.
Completed $150 million CapEx under budget for the completion, zero LTI during the construction. Yes, you can operate in Africa, including in West Africa, without any LTIs. What's interesting is to see that since we commissioned Agbaou, we have been systematically 51% average annual production above the DFS. 51%. We've generated so far $170 million of additional after-tax cash flow compared to the feasibility study. When you look at firsthand where it comes from, you see that in white, you basically have the production that was supposed to be done 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 cost in the feasibility study were, and in black, what we've delivered during those years in terms of all-in sustaining cost.
What you see that is in average, again, we've been delivering 51% more production that was in the feasibility study, overall 10% less every year on average in all-in sustaining. When we publish feasibility study, we are accountable to it, and we deliver on it. Where this success came from, if we take specifically on Agbaou. Well, the first thing was the big success was on the plant. In fact, you see that we've been constantly 30% above nameplate through the Agbaou plant. Overall, we've been added over 6 million tons that has been processed since we commissioned the mine. The second success has been being able to bring more oxide material. There's been two success: building the right plant, being able to have highest throughput, but also being through exploration, bring some more oxide to the feasibility study.
When I look at, again, down on page 11. Sorry, we don't have burgundy wine. On this page 11, when we launched the construction of Agbaou, the feasibility study stated 800,000 ounces of reserves. At the time, we were a small junior company, we were looking at small assets, trying to grow progressively. When you look at the cumulative depletion that has been going since 2014, we still have today, in total, a 1.4-million-ounce reserve endowment. Between the reserve stated and the feasibility study and what we've been producing, we've been adding 500,000 ounces on top. I think we'll continue to add to Agbaou. Clearly, compared to the potential that we see at Houndé and Ity, it's going to be less, that's for sure. It's been already a high success.
If you look at the payback of Agbaou, it was in fact 18 months. I saw 2 years, but no. It has been 18 months. 18 months payback for Agbaou. We're looking now at something close to 2 years for Houndé, and I hope that Ity will be also around 2 years payback. When you look at the first 4 years, we have, in fact, a 60% IRR just on this investment for Agbaou. Clearly, we've been adding $170 million of new extra cash flow into this. Yes, we've been happy with Agbaou. I think Agbaou will continue to deliver for the next 3, 4 years. At the same time, we need to prepare for the next projects. 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 Avnel, 120,000, 150,000 ounce annual production. Given the exploration potential that we see there, we want to do more exploration because we want to bring it at above 200,000 ounce annual production. Houndé. Not going to describe in detail the Houndé asset. I think I would just show a quick video on Houndé and on the construction at Houndé. It's now? I need to press? It's after this one. Okay, sorry. I'll continue with one more. Houndé, 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 zero LTI. You can see the team was pretty happy. It's me?
It's the national emergency all over Canada. They're testing.
Oh, okay. Sorry. It was the time, in fact, to launch the video on Houndé. I need to press a button?
All of Canada is watching.
Again.
I have visited maybe seven or eight mines in my career now in the last four years, three in Australia and four in Western Africa, I've never seen an installation 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 of the administration buildings, the equipment. The choice of equipment, it's just amazing. I've never seen something like that. I think this is the best ever plant. It should be a role model for anybody. I'm very grateful to everybody who's done the hard work here and the sweat. I know it's not easy. As an African, I'm very proud that this installation is here in Africa, and that what we're also doing very good for the community.
The mining industry is always under attack, for environment and for taking care of the people. I think we're setting a good example here in both areas. I think that this should be our template, and we should move from here to do even better. Endeavour is quite on the right size and on the right track anyhow. As an ambitious company, we are still hoping that we will grow further.
That was about Naguib Sawiris. See? Happy shareholder. He wants us to continue to grow and build more mines. You'll probably see next year the same video about the Ity mine and the fact that it's even better than Houndé. Now looking at Houndé, I think I would simply say that after 12 months of production, Houndé has been performing well. Again, we are ahead of schedule in terms of the DFS. When you look at the first year of production, we are looking at 265,000 ounces, and when you look at where we are at the end of October, we are right on track and probably be a bit above all that. Overall, the plant has been, again, working very well, both in terms of throughput but also in terms of recovery. So far so good. Happy with it.
When you look at the contribution of Houndé, obviously this year it's been important. You see the Q3, as you know, is during the rainy season, we usually have a lower Q3, and we usually have, in fact, our best quarter in Q4. Our two best quarters are usually Q4 and then Q1, and the lowest one is Q3. I would just move to Agbaou. Same thing in terms of production and All-in sustaining. We knew that in 2018, Agbaou would be in a transition year as we move to a bit more fresh material. We'll be in the range of 140,000 ounces, and All-in sustaining around $860-$900. When you look at the performance quarter after quarter, we are on track to meet those guidance.
Clearly, Agbaou going forward will be in the range of 120,000 ounces, compared to the initial first four years that we had at 170,000-180,000 ounces. Ity. Won't comment too much on Ity Leach. It's been in operation going for 25 years. The operation will last in January, as we smoothly transition to Ity CIL. It's been a very successful one in terms of cash flow generation over the last few years, and in particular in this year. This year, we should be above guidance. In fact, as we said during our Q3 results, given the strong performance of Ity Leach, both in production and All-in sustaining, and therefore a strong contributor this year for cash flow. Next year will be, obviously, the first year of Ity CIL.
The fact that we 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 Peder, our head of projects, so that Peder can comment a bit on the significant revamping that we've been through Karma over the last 18 months, which we bought it from True Gold, in particular on the plant side, in completely changing the optimization of the plant. I have to say that Peder is one of our high-potential dudes. He's been working for the company for the last 10 years. He's been part of the Nzema construction, Agbaou, leading the Houndé construction, and now leading also the Ity construction.
He is only 33 years old, I can tell you he's impressive. The ones that have seen Houndé, I think have been impressed. The ones who will see soon Ity should be impressed. On top of that, he is part of the Australian team doing skydiving. I'm a bit upset because I've told him that until he does the first gold pour at Ity, I don't want him to do any more skydiving. Peder.
That should be okay. Thanks for those kind words. 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 not only optimization but brownfields projects like the Agba secondary, the Tabakoto underground backfill plants, and most recently, the Karma plant optimization. There's a lot of acronyms on the left and probably a lot of processing detail that not many people are interested in. I think the thing that drives our design philosophy is commonality, reliability, and repeatability. You would have heard us discuss that a few times if you've been on-site, and that's what we've done with this plant. Previously, it was capped out of 75% of its nameplate, and it's operating at 24% above its nameplate at the moment.
It's been another success story for a relatively modest capital investment. Some pictures of new ADR facilities. This was a front-end, back-end upgrade. 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 plant production through the wet and at present, we have that reliability and availability that we were chasing before. This is some pictures of the primary, secondary crushing plant and the new dry plant. Lastly, the HVAC and cement silo system. The cement silo system and storage. We increased capacity by circa 300%, and we haven't had a single day of lost availability due to cement supply on site, and the supply chain security is something we engineer into all of our plants. Karma's production profile.
You can see 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 hauling from a bit further away. Where the base elements state that we should be having a slightly increase in cost profile, we've managed to reduce as well as increase production. I'll hand back to Seb on safety and CSR.
The last point on Karma is we're starting to see some improvements and the benefits of all those changes. If you look quarter after quarter, the all-in sustaining are getting there. The objective was to be in the range of $800-$850 max on Karma, and we're getting there. Pretty happy with the changes that were done on this asset.
Before we go into CSR, we can take some questions on the operations.
Otherwise, I'll jump quickly to projects and exploration. No questions? We can always have around a good Burgundy wine after. I hope you have Burgundy wines.
I think we do, actually.
Okay.
White and red.
Quickly on safety and CSR, which is ability, a key pillar in terms of operational performance. We working towards trying to reach the zero GRA lost time injury frequency rate, which is not easy, but we are improving year-on-year, 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. 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.
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. That's always applauded. Might have a short-term impact, but in fact, on the long-term, it brings the right results. I think the construction track record is just impressive. Three projects so far in a row without any LTI. When you look at the number of hours that has been worked for those three projects, it shows that the culture of safety is from day one through the construction. This is why after construction, we're able to maintain also this excellence in safety through our operation, whether at Agbaou or at Nduna in particular.
It's not just about safety, it's also a license to operate. 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 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.
What you need is to be able also on top of the usual things that we are doing, you need to make sure that you are 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 for the communities. What we've decided with Naguib Sawiris himself is that any dollar that Endeavour would put in a fund to help and support entrepreneurs locally, he would put the same dollar.
We've identified already three projects for our three countries where we operate around Houndé, Ity and Kalana, that we will be presenting beginning of next year, where in total, Endeavour will be spending over the next three years about $9 million of those different projects, and that Naguib Sawiris himself will be adding $9 million to this fund personally as his contribution towards the communities and developing entrepreneurship around those communities. For example, for the ones that came to Houndé in the past, Houndé area was very famous for the quality of the meat. It was called the red gold of Burkina Faso, because they were exporting back 50 years ago. They were exporting meat, quality meat, across the rest of West Africa.
Over the last 50 years, they've been completely, unfortunately dismantling step after step this remarkable activity. We are as Endeavour through this initiative, building again some capacities in the area, to bring back to Burkina Faso, this strong cattle quality that we are able to do in the area. Again, we're representing that beginning of next year. Obviously, we working on all the United Nations Sustainable Development Goals, across all our operations. You probably saw that we've published our first sustainability report following the GRI reports and guidance, which is for the first time. 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 subjects. Have a look, at our sustainability report.
This is the first one. 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 talents, that's probably one of my key topics with the team as management. If we want to be successful, we need to have local talents. 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. This initiative was launched last year, and we're starting to see some very strong and good results. We've appointed Mohamed Issiaka as new GM for Ity, which is from the region. I think we will soon appoint another GM from the region.
We're also working a lot on women in mining. I was about to say men in mining, this we have already. Women in mining, because as you know women tends to be sometimes more efficient, in particular in taking care of equipment, driving. Yeah. Driving. 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. I think it's important also to grow women in mining. We probably want to move to quick videos around a few interviews we did.
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We have four more videos like this. If you want to grab a coffee, it's going to last about six minutes. Then we'll start with the second section.
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Moving to projects. How do we grow cannabis? Better. Okay. First of all, obviously, this has been a tremendous success around our construction team. Very proud of them. The current leader of that team is here and therefore I'll spend more time for him to explain what we've been doing and what has been our success around. Clearly, there was the Nzema built in Ghana in 2010, the Agbaou in 2014, and I hope that the case study done showed that it's been a good mine and it will continue a bit for a few more years. Houndé, which is already for us a success, and soon, we're expecting to come up with a big success with Ity.
Far, all of them were built, the four of them, on schedule or ahead of schedule, on budget or below budget, and with 0 LTIs so far. So strong construction track record. Won't talk again about ahead of schedule and below budget or on budget. I think that the different mines speak for themselves. What is probably interesting and sometimes not necessarily shown is the fact that a lot of companies have been saying, "Oh, I'm ahead of schedule." Yeah, okay, let's look at the schedule. How much time did it take you to build your mine? 36 months? Well, that's far too much. It takes us on average 16 months to build the same type of mines. Sometimes it goes back to quant funds, what they want to hear. Ahead of schedule.
Yeah, no, the question is, what's the timeframe on which you're building your mines? I think that it's been remarkable to see that our four last projects were built between 14 months to 18 months. Which is, compared to peers, we're trying to track that on a regular basis, on 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 another benchmark, which is what's the dollar cost per million ton per annum of processing capacity. What's interesting to see is that we've been driving down progressively our numbers to be below $100 per million ton for a CIL plant. I think that's also important.
We're trying to ensure that we improve through the design and through our in-house capacity capabilities to be able to progressively improve this number of million dollars per million ton of throughput capacity installed. The last one is what has been around self-performing in construction. I'll probably let Peter explain what we've been doing into this and give a bit more color, what we call in-house construction capability and self-performing.
Thanks, Seb. Generally, that takes on the line of we manage an EPCM contractor. I think we're wholly different. We do use an engineering and procurement firm Lycopodium , 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 contract we have on site is for structural mechanical piping, SMP, and that's just because I can't persuade Seb to spend the money for me to, yeah, buy the gear I need to do SMP. The criteria we use is that we need to save 20%, and that includes the cost of all the capital to commence. People look at our shiny new batch plants and all the equipment we buy and only budget those to be paid back within a single project.
The fact that the bulk of them will be used over the next 10 or 15 years, they've already been paid for. The capital is written down over one project, and for each subsequent project, not only commence quicker than anyone else, we can do it for cheaper. The number of self-performed tasks that you've seen from Nzema at 25% to 95% for Ity CIL. We've had an increasing self-perform capability, but also an increasing capability for what we can do. Our current civils team, if we had to drag them over to go and rebuild Agbaou somewhere else, we'd be complete on the civils front in 6 weeks, versus 40 weeks for the first time around. There's a lot of parallel benefits that only become apparent down the line.
My favorite piece of equipment that we own is our 105-meter cube an hour wet batch plant. 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. You get an idea of the cost savings. All-in costs, including rebar and all management costs, including P&Gs, is running around $600 a cube versus $1,600 for peers. There's a prohibitive amount of work and a very steep learning curve in getting these things set up, I think the benefit speaks for itself.
Okay. I try to summarize what we have been doing only on 3 asset. The first one indeed is Houndé. I'll give an update on what we are doing in Ity. Also some ideas on the new greenfield discovery, Fetekro area, that we made and we announced in 2018. Okay. In Houndé
After a couple of years of no drilling activity, where we have been heavily involved in the groundwork, so where we have been remapping and reanalyzing and resynthesizing, I would say, the whole over 1,000 square kilometer package we have in Houndé. We started again the exploration with initial drilling in 2017 based on the ranking that has been done according to the 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 gold in soil anomaly. We have been working mostly on that.
Our target, according to the exploration strategic plan of this 10-12 targets that we selected out of many more in Houndé, is to discover between 2.5 and 3.5 million ounces over 5 years at, if possibly, a discovery cost lower than $15 per ounce. Next one. Something that's very important, and this is the 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 they work on this small asset without looking at the big picture. We have the chance on Houndé to have a world-class tenement, several licenses, overall 1,000 square kilometer.
I can tell you that each square kilometer has been mapped on the geological point of view, on the structural point of view, on the alteration point of view, on the gold occurrence and everything. It has been a tremendous work that has been done while we were not drilling, and we benefit out of it. When you look at this slide, okay, I'm sorry, it's a geological map, but it just show that basically, the Houndé tenement is located over a broad anticline. When I say broad anticline, it's an anticline that spreading over dozens of kilometers. Martino, next one. Okay. Here is Kari, okay. Next one. Okay. You see the axis, what I call F1, is the axis of this anticline.
Structurally speaking, we have been working on that stuff, and that's why I was interested in the Kari area without redoing all the Permian structural geology. In Kari area, there are three phases of folding. The first one is F1 stuff, which is structurating all the pile of andesite and meta-volcano sediment in this big anticline. In the Kari area, you have some oblique stuff with a secondary folding phase that created basically the syncline that you see in Kari Pump. Okay? Come back. You have one structure that's like that, before. You have some direction going like that and crossing over, implying that you have the first folding stuff just like that, but you have also on a higher wavelength, a second phase of deformation with which the mineralization of Kari Pump is done. It's not just like that.
It's a big analysis to see why we are looking in this kind of area. Next one. Just a summary of the Kari area. Basically, after we announced the discovery of the Kari 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 two other discovery, namely Kari West and Kari Center, located over the broad Kari anomaly. You see the extent. It's a huge area, basically 4 km by 3 km. That's the extent of the Kari area where we made the discovery today. Still there is a part of the Kari anomaly, gold in soil anomalies that has not been tested.
Overall today, even after delineating Kari Pump, we still have 35% of the area that has been drilled with a drill fence, at least with 200 meter. We still have a lot of things to do. Kari Pump, Kari Center extend 1.2 km, we are talking a very large area, and Kari West is the same. Everything is located less than 7 km away from the plant and is located basically on the road that is supposed to be built between Bouaré and Bindou. Everything is perfect in term of location and in term of size. Next one. 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 meta-volcano sediment and chemical sediment, exhalative, what we call exhalative sediment.
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. The fact that the mineralization can propagate easily, I would say, within the volcanics by opening stuff. When it hit the chemical sediment. In fact, there is a kind of accommodation, but the mineralization is not going over. That's one of the reason why you have this kind of thickening of stuff, because probably the mineralization couldn't progress more to the southeast. Still early days, we have a bunch of ideas, but that's something definitely that's very important. Today, what has to be noticed, that basically it's 1 million ounces. The grade is 2.71, which is a very high grade, and it's much higher than Houndé itself, where we are targeting 2.1.
The low cost of discovery, because Kari Pump itself, the money we spend on Kari Pump is equivalent of $9 per ounce, which is one of the lowest in the industry. Next one. Here is a section. Basically, this is a kind of north-northwest and south-southeast section. What you can see is that Kari Pump remain 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, again, is slow dipping between 0 to maximum 40 degree. You see that at the bottom there, we are barely at 150 meter depth. We still have the possibility to go on that. That's very good. The continuity is tremendous.
Each hole, 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 encounter the mineralization. This mineralization just continues just like that. Okay? Indeed, it's a quartz vein system. You have pinch and swell. Next one. 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 thickened grade. That's something that's very important. When I'm talking about the syncline form of this stuff, which is a secondary direction compared to the main axis, that's what I'm talking on. I like that because it's not because, here, I have nothing. That stuff, the syncline over a secondary stuff and so on.
Okay? In this kind of system, it's not because you have a thin interval with a lower-grade mineralization, that 50 meters away, you are not going to find a thick and rich stuff. Indeed, I don't tell you the story about the progression of excitement in the team, but when we were hitting some kind of stuff, very narrow, not so rich and so on, the morale went down, and after you move 50 meters away and you are swelling again. This is the nature of this type of deposit. The beauty of it is very high grade and very continuous. Yeah, that's good. Next one. This one was not in the press release. I asked Martino to put it. Basically, that's an accumulation map. This represents the quantity of gold you have per hole.
It's not a gram per ton, it's a meter gram meter. It's just to show you the impact of that. Basically, when you do the contouring, you see that first Kari Pump, as it is defined today, is still open to the north, to the southwest, and to the northwest. 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, lying quite flat between zero and 40 degree. We don't know it yet. I'll show you what we are going to achieve that to prove the continuity between 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. You won't see that very often between zero and 80 meter.
Five meter at 109 gram, 11 meter at 31 gram, 20 meter at 17. Some of the stuff is really outstanding. Huh? It's not very often that you'll see this kind of grade, especially in the oxide section. In terms of ounces, where are we today? Basically, we are sitting with our million ounces, and if we report it to the Mounade project, basically in one year, we have been adding 40% of the Vindaloo resource. It's just the beginning. The main difference also with Mounade, is that Mounade, basically, we are producing Vindaloo. Vindaloo is 90% fresh, 10% oxide. Kari Pump, just because it's located with this interval between oxide and transition, we are at 45%. This is at 1,500 stuff. Basically on the production scheme, depending on the velocity, we are able to convert this resource into any kind of exploitation license.
We can increase thing to extend the potential up to maybe 10 years of that. Depending on the Kari area potential, which is Kari Pump, Kari West, and Kari Center, this thing can be a game changer for that. That's why it's too early today to decide whether we want to increase the capacity of Houndé, because my recommendation is let's wait until the end of next year to see whether we are talking 1 million ounces, Kari Pump alone, or we are talking 2 or 3 million ounces, because if you have 3 million ounces or I don't know, the decision to be taken, in the plan is going to be completely different. That's why we are so aggressive and that's why we want to go very fast. 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 ounces 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. Here you have a kind of cartoon of what we have. In the circle is Kari Pump, but is not today. The ellipse, you have Kari Center, that's this ellipse. Kari West is located, and you see that we are going to have a first grid, targeting Kari Pump extension because we still believe that there is a lot of answers. Remember what I said about this contact. Okay. This lithological contact between the structural behavior differently from volcanics and exhalative sediment. We do believe there is a significant potential to this direction.
By the grid number 2 that we'll do in 2019, we'll be trying to expand Kari Pump toward 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 answers. 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 much more vertical dipping, let's say 60-90. 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. Kari Pump is exceptional in term of grade, and here we are targeting maybe two gram per ton, which is the average type of Vindaloo deposit.
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 200 meter. We have air core line reconnaissance on two over 200 meter. That's basically the size of the anomaly we are seeing, and this is the in-field program we are going to do to book indicated resources to that in what is known today as Kari West, not mentioning the possible junction between Kari West and Kari Pump. Next one. Okay. Vindaloo has a lot of things to say. We think that Vindaloo has not been properly understood in term of structural behavior. I spent two geologists, and they've been working a couple of months remapping all the Vindaloo pit as it is today.
We have some confidence that many things were missed in the past, That's good for us. I think I've been spending $1.2 million-$1.5 million next year, to target some of the deeper stuff in Vindaloo. Believe me, the potential is very high. You see that this is a kind of representation of what we have been doing. Basically, we have a set of offshoot, going in direction. Basically what you see is a program we designed just to check whether or not it's feasible. Vindaloo, as it is known, that's what we have in our book. We do believe there is a significant upside potential laterally and at depth because we have been mapping all the fault that have been displacing the deposit, and that has not been understood structurally speaking.
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 attitude to try to understand better the big picture and the system as a whole. Next one. Okay. That's also some target. I've been talking of Dohoun, Sianikoui for a while. Unfortunately, with the big success we had on Kari Pump, we have no time, but this is maybe not a million-ounce stuff, but this is very high-grade stuff that we are targeting. A little bit like Bouéré. We may be targeting three to four gram, and it's not located very far away. That's something we are going to drill also next year. Next one.
This is the last one. We'll take some questions now on exploration at Houndé.
Short, I'm sorry.
Yes.
Just on Kari Pump, I guess the quartz veins, once you get down through the 100 meters, it's just quartz veins?
Yes. It's a quartz veiny system with alteration and so on. It's quartz vein with sericite, or rhodochrosite alteration, some sulfide. It's quite classical stuff. The key point is, that's why people are so amazed about that because we can discuss about the interpretation. That's right. It is folded second order compared to the main fold. 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 contacts are much more vertical, and this is related to the first folding stuff. This is a big anticline doing like that, but this is not matched by this. The mineralization is cross-cutting like that. When you look at that, you have a folding, but you have also a thrust effect. That's why you have this kind of thing.
This is the only way, if it's not a quartz vein extension type, which we don't know whether it's there. There are very little amount of deposit like that in the world. Okay, you have Natougou maybe, but it's a completely different environment. This one is one of a kind. Honestly, I have to be humble, we don't understand everything. 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 already a lot of drilling that had been done on Kari. Here and there, they had a sneeze. They have a good intercept and 25 meters, not the right direction and so on.
By putting back all the big picture and looking at secondary folding and so on, that's how we decided to go systematic on the Kari area and eating these kind of things. 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. When you get off the laterite and saprolite, you'll just see this white quartz stuff and,
Well, basically that's what you say. That's why initially we were not 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 mineralization. It's only when we have been starting to drill in the transition, the fresh, that we started to understand better where the gold was associated. Basically, it's related to a quartz vein system, which is prolongating and pinching and swelling as it is in many places. The only difference is this is not vertical. This is more flat-laying and so on. Okay, again, after I'm not a mining guy, okay?
What I know that even if you have to take away 50 meter above and so on, you are going to start to make money straight immediately from the surface because you have good stuff very close from the surface. Again, when you look the proportion of oxide and transition, when you look at the numbers we had between 1,500 and 1,250, we had a 200,000 ounces decrease, but the grade is increasing. When we designed the pit shell at 1,500, we had, let's say, 1 million ounces at 2.71. When we did it at 1,250, yes, we had a decrease. We had only 800,000 ounces, but the grade was over three grams. When you look at that, the proportion of oxide and transition between 1,500 and 1,250 went from 45% to 55%, 60%.
It's just that by going less deep, you put a higher grade in your basket.
Are there other questions on Houndé?
Yeah, Patrick, just on the first phase of folding and the second phase of folding, here we're seeing the antiform from the first phase. On the next slide, is that gentle synform? Is that a gentle synform here?
Yes, it's not the same wavelength.
Yeah.
You have a big folding.
Yeah.
That's something that you follow over 60 km.
Yeah.
On top of that, you have a higher wavelength stuff that it is a different phase, a later one. Even after that, we have a third one that we know is occurring.
Okay.
Honestly, I am very cautious about the geological interpretation because it's still very early days. On top of that, when you look at the anomaly, I don't know. When I see this kind of stuff quite flat-lying, it has to have a root somewhere. We still have to find the root from where it's going from. There is still the possibility that below the Kari anomaly, somewhere at depth, there is a big intrusive sourcing all this, whether it's Bouéré, whether it's Kari Pump, whether it's Kari West, whether it's Kari Center. It's just the beginning.
In the sense of time, we'll go straight to Ity and leave questions for later.
Ity, I'm going to go a bit faster. Basically, that's the tenement we are working on. That's what we own. It's a big area. It's over 1,000 square kilometers, basically 100-kilometer long by 10-15-kilometer wide. Our target was based on the initial success we had on Ity, where we have been extremely successful. Already, we have been adding in Ity area 1.6 million ounces, mostly earlier on in 2017, where we upgrade the DFS and have been adding, I don't know, $300 million or $400 million to the project NPV. Next one. This is a geological map. We have been working this area for a while now. Basically, on a geological point of view, very simple.
You have a big, what they call Grand Bleu Intrusive Suite, which is a kind of gneiss-granodioritic stuff that's including the Birimian sediment to the north in Ity and that becoming a little bit blue metamorphism towards the south. Next one. This is an initial map that I've been showing in the beginning, and that's 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 we have so many targets and it's very difficult to differentiate by the gold-in-soil anomaly alone. This trend is just amazing with some value in geochem or in auger that are just jaw-dropping because sometimes you do an auger stuff and within the first five meters you have up to 10 grams per ton just in that.
Does that mean that you have continuity because a lot of this anomaly may have been displaced. Just show you the prolificity of the system and that's somewhere where you have to find the root where the system is. We have been acquiring in 2017 a very large-scale, high-resolution VTEM stuff and so on. We're still working on that, interpreting with the data. The problem we have in this area is that there is almost no outcrop. Basically, for the calibration purpose and due to the very high variability of the rocks you encounter, you have multiple solution when you want to deconvolute the stuff and introducing 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.
You see how many meters we have been drilling, 55,000, 69,000. It was very aggressive. Next one. This is 1.5 detail what has been added, namely Bakatouo, some extension in Deep Mont Ity, and also some extension in Daapleu. Next one. 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, just looking at the green dot. Basically, we have been working in the Daapleu area, and mostly we have been working in the Floleu exploration license that we control 100% immediately to the south where the Le Plaque discovery has been made.
I just have a focus on Le Plaque because that's a 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 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 will see tremendous intercepts or something. This slide is quite nice. You'll see a couple of cross-sections. 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 Main. This is Le Plaque Southeast, and that's a target we call Epsilon.
What you can see, and I'll show you on the geophysics, that Le Plaque is a completely different deposit from Mont Ity, from Daapleu, and so on. It's a mixture of contact at the intrusive to the north between the diorite in purple, in violet, and the pink is a granodiorite, and it's located at the contact and with that is characterized by a strong dip, quite vertical stuff, but very high grade. Okay. Basically this is the best some of the selected stuff that we have been looking at in this area while expanding the Le Plaque Main area. 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 granodioritic body that extending toward the Ity area. Some intercept are just very nice.
I don't comment that, but you see this kind of thing. We are typically in the very rich part of the Ity. That's what we love in Ity. A lot of oxide and very high grade combined with a very thick thickness. Here you have just some selected intercept, something that we did not 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 at six gram, five meter at 32 gram, and so on. We are in a rich, high-grade territory. Again, we are targeting for this kind of stuff between 2.6 to 2.7 gram per ton again. Here is a cross-section of the Le Plaque Main. You see the quality of the intercept and the mineralization.
Indeed, 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 the kind of the intercept that we have, up to, let's say, 12 meter at 25 grams almost. We have high pocket and so on. It's a nice stuff, and everything is broadly located as a contact between diorite and granodiorite. That's why with the geophysics, we are able. This is a northern extension of Le Plaque, something that you guys have not seen. Basically, this what we say pit is the first area, and we are extending it in that direction towards Falaise. You see the type of intercept we have.
This thing, we do believe it's going forever in the direction of Falaise and in direction of Ity. We see the beginning of the delineation of this thing. Next one. This is another type of this is linked to Le Plaque, but this is 100% located within the granodiorite itself. It's a small shear zone parallel between themselves. You see, there is sometimes a problem of continuity, but even if the grades are sometimes very nice, we have a much more difficult to understand, this parallel trending, which may not have a very long continuity. But it is a part. That's something also. Sorry.
That I'm doing every month or every two months when I do exploration, I have a new pit to be designed because it helps me to understand the propagation and where I have to check again to see whether I have a failure or not or misunderstanding in the pit. I'm trying to combine my exploration effort. Believe me, each drilling campaign on this, the resource geologist is validating the hole because he will have to validate the resource. We are doing 3D stuff, and I'm doing a tentative pit just to know and to integrate, to discuss with the mining engineer, whether it's feasible or not. If he said me, "Oh, don't look at that, we will never produce that," I'm stopping that stuff and I'm going to concentrate. 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 Plaque main. This is the shear zone in the granodiorite, but we have Yopleu target, we have Legaleu target, and we are extension towards Falaise also. Some of the yellow point to the north just returned yesterday, some tremendous intercept. This stuff is going on, probably towards Falaise and toward the north. We have today, this is Le Plaque. Basically, we have one kilometer, almost undrilled on the prolongation of the Epsilon plan. Sky is the limit. We are progressing on that, and we are doing as much as quick as we can to do that. That supporting this is air core stuff. That's something that we were not doing before because we had too much water.
We adapt the system to do this kind of air core stuff quite efficient to receive some stuff. Some of the air cores show very nice intercept, and that's something that we base our regional exploration on that stuff. Next one. Daapleu. This year, we drilled a few deep holes in Daapleu 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. Basically, we prolongate compared to the lowest pit at Ity's plan in the DFS, where basically we prove that the high-grade stuff, just at the contact between the felsic, the rhyolite, and the meta-volcano sediments, this is going forever at depth. This is a typical shear, and it will go, go. You see. Come back. Sorry, Martino.
6.3 meter at 8.4 gram, all this section is just like that and going forever. We do believe that there is a decent underground potential in Daapleu. It's not the time to do it now because these hole are expensive, definitely in the future. Next one. That's something that we have not been addressing, is what is below the Ity Deep Mont Ity pit. This is just a leapfrog view, and it's pretty obvious that we have some high-grade ore shoot below Deep Mont Ity and Ity 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, we'll do the exploration on the right time. 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 two years ago in Ity, you remember that everybody was, "Ah," when we make Bakatouo, basically, that's a Bakatouo deposit. That's 700,000 ounces at above 2.1 gram, 2.2 grams. This, that's the heap leach pad. Okay. This year we sunk a deep hole. You see this hole, very deep. With the angle, we could not bend it more. We found, even though not the type of grade that would provide in Bakatouo, but we found a few area. The system in Bakatouo is just like the flower. You have a deep-rooted stuff, when you arrive at the surface, everything is opening up. That's why Bakatouo. 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 drill it.
I need for them to stop, to wait for one year until it's safe to drill. Again, whatever is in the leach pad will be the first one to be processed in the CIL to clean the stuff. Bakatouo to the southwest is not finished yet and is still a story. Again, I have all the historical data for the former Avnel Gold Mining, there are some very good-looking anomaly that were never drilled and that's located immediately below the central part of the leach pad. Ity is ongoing story. We have to prioritize and so on. It's very important for Le Plaque because it's an exploration license that need to be converted in exploitation license. This is going to take a couple of years. Again, the average grade we are targeting is 2.6, 2.7.
It will fit very well in the decreasing of Ity production after year two or three. Next one. Okay. Just a word on the Toulepleu. Toulepleu is a big license to the south. We've been doing some geochem, some trenches and so on. We are revising the geology, which is a bit different from what we were expecting, we are going to start initial drilling next year. Okay. Next one.
We can take it for questions now on Ity exploration. No one? Okay. If there's no other questions-
Good
Feel free to Fetekro.
You know it all. That's fine. Fetekro. Just a few slide on Fetekro. We had a lot of exploration license a bit spread out in Côte d'Ivoire and also in Burkina Faso. What I've been trying to do is to prioritize all that. We have been relinquishing a few of them, where we were not seeing a lot of potential or at least potential to reach above 1 million ounces, okay? From very quickly. Fetekro is an old property that was in the basket with La Mancha Côte d'Ivoire, where initial work has been positive, but we didn't understand very well the continuity 3 years ago. Honestly, with what had been achieved on Ity itself, because again, back in 2013, when I started with La Mancha, there was 200,000 ounces in Ity.
With the potential we were seeing in Ity, basically it was much better for me to ask Sébastien to spend the money on Ity rather than in Fetekro. When I did a review of all the regional exploration license, we changed a little bit the hypothesis, especially with the variation of, let's say, the overall Birimian stuff in Lafigué stuff, where we were thinking that there was a possibility of thrust to explain that, and that's what we tested. Next one. Martino? Okay. Well, this is just a core. We are also talking about quartz veining stuff. This is at the contact intrusive. This is a typical Lafigué core with some very high grade. You see this one is 10.6 meter at 8.3 grams. We are quite happy to see that with some visible gold.
That's where the two cross-sections. We have been embarking in overall geochem anomaly mapping gold in soil stuff, and we came up with at least 10 additional targets that we initially tested by drilling. 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 Lafigué, something I would like to say and that has not been put in the press release, is the sensitivity of the pit at 1,250. Basically, this stuff is very, very strong because you have almost no decrease in ounce between the 1,500 pit and the 1,250 pit, and the grade remains the same.
Namely, basically, you lose just a little bit of ounces, but the grade jump to 2.42 instead of 2.25. It's a very solid type of deposit starting at surface. I think the strip ratio should be around seven, this kind of thing. It's pretty reasonable for this type of thing. And again, today between indicated and inferred, we are close to 720. 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 hole to qualify it even in inferred. We think that the potential of the Lafigué stuff is at least 1 million ounces, maybe more because it's still open. And 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. Here is the cross-section, so it's very simple model. You have a basalt thrust and the mineralization is, you have several thrusts and the mineralization is located within the hanging wall of this basalt thrust. This is Lafigué center, so you have two types of deposit. Next one, two types of thrust affected. Here you have a felsic intrusive with some very interesting section, like 30 meters at 12.2, and basically the mineralization is associated at that. On the map, it's still open towards the south, towards the east. Basically, we have some significant extension that we can expect on that. And this is simply a cross-section of one anomaly that's located only 1 kilometer away.
We have only a couple of fences on that stuff, but already, we have some good-looking intercept, 5 meters at 7.6 grams, more or less in the same environment laterally from the main variating shear.
Any questions on Fetekro before we move to the last presentation? Great. Thank you, Patrick. Next up is Vincent to talk about balance sheet.
I have one good news for you. I'm the last one. I'm going to speak about the balance sheet and the management of our balance sheet, which is a key pillar that Seb has mentioned earlier, that aims to optimize the shareholder return. We have three main objectives in managing the balance sheet. First is to maximize the return on capital employed. As you have seen, we have invested almost $1 billion over the past few years, we want now to give our shareholders the maximum return. The second and the third objective are related to the financing of this capital employed by finding the right balance between 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.
Regarding the debt, the objective is to ensure the financing of our organic growth while optimizing the cost of the debt. Now that our high CapEx phase is coming to an end, the objective and the focus of the group is to maximize the return on the capital employed. On this slide, we track 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 Houndé CIL, which has been finished in 2017, Ity CIL, which is of course in construction. Keep in mind as well that the increase also due to the two acquisition we have done, Karma in 2016 and Kalana in 2017.
The 2015 to 2016 increase reflects mainly the acquisition of Karma for $120 million, while we have started to build Houndé in April 2016. During the period, we have also divested Youga. From 2016 to 2017, the increase is mainly due to the buildup of Houndé, which amounts to $470 million, which is the initial price of acquisition plus the $330 million for the plant. While Ity has also started with $70 million invested in Q4 2017. During the period, we have also divested Nzema. In 2018, the increase is now due to the Ity CIL investment, which totaled $276 million at the end of September. One can note as well, this is the main use of our capital employed. You can see as well that the working capital and the other balance sheet items are quite low compared to the rest of the assets.
Having done that, now it's important to track our Return on capital employed and show to our shareholders what we are able to achieve once all the projects will be online. You see that in 2015, the capital employed this year is calculated as the EBIT, which is adjusted from one-off items like the M&A and acquisitions, but also the impairment test, and is divided by the capital employed that I just mentioned. You will notice that in 2016, we have a strong return, 13%, a strong increase, particularly linked with the performance of Agbaou and Ity. In 2017, it decreased mainly because we have all the investment of Houndé, but only 2 months of production. If I have to annualize the result of Houndé, the Return on capital employed in 2017 would have been as well around 12%.
With Houndé and Ity now coming online next year, the objective is to increase the Return on capital employed and the target for the group is to return 20%, which is now the objective for the whole group. As you know, Houndé and Ity have important returns, and Internal Rate of Return above 20%. As Sébastien 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 zero in 2016 and 2017, and it has increased since the beginning of the year. As we commented during the third quarter analyst call, this working capital is going to decrease probably by the end of the year. The fourth quarter is generally strong, and we use our stockpile that has been done.
This is the effect for the fourth quarter. Structurally, I would like you to keep in mind that our working capital is going to increase next year. Let's see each of the components. For the receivable, the item is normally fairly short-term and relates to the timing of gold sales. In addition to that, 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 companies to recover this VAT. 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 build-up of 2 falls.
First, we have increased inventory, which is due to projects coming online like Karma, Houndé, and it will continue to be the case with Ity CIL next 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. For both Houndé and Ity CIL, foresees some stockpile build-up in their first years to process higher grade material. 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 is a mix between the suppliers for operations and the suppliers for the growth projects.
As the project will come to an end, the suppliers are going to decrease, and the structural actions that we are taking here as well is that we are trying to better negotiate the terms with our key suppliers in order to maintain this level. The second layer is the net debt management. Aside from looking at capital employed, this slide is interesting because it highlights all the investment we have done and financed. In total, we have invested $940 million since 2016, and this amount should be closer to $1 billion once the Ity CIL is completed next year. As you can see here, in that waterfall 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, on Ity CIL, we have spent $15 million, which ultimately added 1 million ounces of reserve, and that impacts the project and creates about $300 million value. At Houndé, we spent just over $10 million on Kari Pump, which outlined 1 million ounces, and we expect a similar increase in value of the project. It goes on, and the list goes on with Fetekro that Patrick just mentioned. While these investments take a bit longer to hit the Return on capital employed line, they ultimately are a key driver to maintain a strong Return on capital employed in the medium to long term.
The second thing is that we have invested $110 million in non-sustaining CapEx that relates to things like the secondary crusher in Agbaou, the relocation or the pre-stripping we are doing in many mines. That typically provides immediate return. The largest portion after that are the two projects, Houndé and Ity. And last, we spend about $60 million, to buy the 20% stake we have in Ity. Looking forward, we can see that the largest investment for next year is the remaining $60 million-$70 million 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 of the key financing source is $300 million, which comes from equity injections, with La Mancha being the largest contributor with its anti-dilution right. Then the equipment financing for $100 million.
The sale of Youga and Nzema, $60 million. And we have financed the rest come from our debt drawdown, $270 million. And of course, we have also self-financed all those investment for $210 million from the operation over the period. As we have been investing significantly into the business and while we are dependent from the free cash flow generation to limit debt drawdowns, our strategy has been to put in place a gold collar protection program during investment phases. The idea is not to put and freeze the company once we significantly invest. For Houndé, for example, we put in place a collar between $1,200 floor and a cap of $1,400, and this has finished last year. For Ity CIL, we have been able to get much better condition with a floor of $1,300 and a cap of $1,500.
We have protected 400,000 ounces, which is 40% of the group production between February 2018 and April 2019. We benefited a bit of Houndé, but we are benefiting now much more because of the gold price drop, with the collar of Ity CIL. To date, we have done a gain of $3 million, and we have still 190,000 ounces in that program, which represent a net gain of $15 million, if we assume a $1,200 gold price. It represent an additional $9 million gain for each $50 per ounce gold price decline. The current collar expires in April next year. Once we are in production, the strategy of the group is to remain unhedged. On this slide, you can see the debt evolution since 2014.
The debt was high in December 2014 with the start of Agbaou, particularly when you look at the gearing, which was 1.7 times at that time. After an important phase of debt reduction between 2015 and 2016 to restore the balance sheet, the debt has increased again in 2017 and 2018 with Houndé and Ity CIL construction, to reach today 1.8 times net debt on EBITDA. But with a gearing matrix which remain very comfortable, as the net debt represents only 0.3 times our market capitalization. This is a strong contrast with the period before La Mancha partnership. Our goal is to have a net debt-EBITDA ratio between 1.5 and 2 times during maximum, during the construction phase, and to deleverage rapidly to come back to 1 time, once Ity CIL will be in production.
Our objective is to remain below 0.5 times net debt on EBITDA on a nominal basis. The debt restructuration, as you have seen, we have completely restructured our debt in September 2017 and in early 2018 to ensure the financing of our growth project. We have increased the source of financing from 5 to 8 banks, and then we have more diversified source. We have lower interest rate. As you can see, we used to have a LIBOR plus between 375 and 575 basis points. We have now lower interest rates, 3% for the convert, plus a reduced spread for the RCF. That helps to save about $5 million per year, with the removal of maintenance cost. The liquidity is also better, when we know that most of our project are now financed.
Last, the maturity has improved from March 2020 to September 2021 for the RCF, and to February 2023 for the bond. Looking forward, we have also significant source of financing to fund the remaining Ity CIL growth CapEx. As you can see on this page, when looking at the liquidity sources available, $213 million, when we add the proceed that we expect from Tabakoto and Nzema sell, which are $80 million, and the remaining equipment financing for Ity 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 issuance. As you can see on this page, despite all the investments, we have contained our equity issuance not to dilute too much our shareholders.
We have today 108 million shares in circulation, with very little dilutive shares as we have today no stock options, only 50,000 old stock option plan and some PSUs that we are coming that can be paid either in cash or shares that represent an equivalent to 3 million in shares. The maximum shares that we can issue today is 200 million. 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. You can see two scenario.
The first one is the dilution if we reimburse all the shares, then needs that the price to reach CAD 20 per share, and that it creates a 13% dilution. The second one, we can also choose to reimburse the capital in cash, which is $330 million, and the rest in shares. You see the dilution, which increase with the share price, but remains between 1% and 3% dilution for share price moving between $30 and $40 per share, and it reaches 6% for $50 per share. The dilution on our capital is quite limited if we use that strategy. Of course, we can decide to pay everything in cash. The perspective of dilution linked with the convertible bond is very limited.
Before the conclusion, I would like to come back to also a point in 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 share price evolution? There is no empirical evidence about this, and it's a long debate. But I wanted to show that on this page, the share price evolution of 68 company of similar market cap, which issues convert since 2015. The graph shows over time the stock price performance of convertible issuers, which runs the gamut. Analyzing closely the underlying data, it shows that the stock performance is related to business performance and market sentiments and not to convertible issuance. While the share price decline in the first days, over a long period, there is no correlation.
To conclude, as I have showed you, our balance sheet management approach is strongly linked to our capital allocation decision. It's the constant trade-off between the hierarchical order, which is first, to finance the development project. Second, paying down the debt in order to rapidly deverage the balance sheet. Third, pay dividends, as Sébastien was mentioning, once we are on track for the deveraging and once we have some capabilities to sustain the level of dividend that we will pay. Last, and when appropriate, looking at bolt-on acquisition, if it makes sense for the portfolio. This is much more about bolt-on acquisition that are paid in shares, never really in cash, and we use cash generally to make specific acquisition, like exploration license or to increase our stake in some key assets. This is our capital allocation strategy.
Thank you very much. I'm ready to answer your question if any.
Any questions? Great. With that, we'll conclude with Sébastien's closing speech.
Thank you. I'm amazed that you haven't disappeared or fall asleep. Key takeaways, two minutes before drinks. Burgundy, Dan? In the meantime, I checked, it is Burgundy, I'm lucky. Key takeaways, I hope you understood why we like West Africa and why I think you should, whether it's in Endeavour 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 explain 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 billion in the business. This was to prepare the right portfolio in order to start generating strong cash flow and be able, during 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 four pillars that we've been working on. Operational performance and short term, you saw our guidance for 2018. We are on track to deliver high end of production and low end of the all-in sustaining project. Thanks to Peder and his team, we are ahead of schedule, two months ahead of schedule, we hope to have first gold pour at Ity at the beginning of Q2, with another strong success, hopefully, for the team. Four in a row.
Exploration, Patrick went into details why we are so excited about exploration. Discovery cost at $13 per ounce and already 4.2 million ounces indicated resources in 28 months discovered along our 10-15 million ounce target for the 5 years. Key success at Agbaou, and at Houndé, Kari and the Kari area is a game changer for Houndé. You will see, hopefully soon, with the announcement around Le Plaque for Ity, that we are committed in delivering and ensuring that our two flagship assets, Houndé and Ity, have 250,000 ounce+ annual production over 10 years and below $600-$650 all-in sustaining, ensuring that Endeavour will be in a position to generate strong cash flow going forward. Last, I'd like to thank my team.
Not only the executive, which are here in the room, but also all the men and women that we have on site and have been working hard over the last two and a half years, in making this turnaround. For me, it's a privilege, I'm very proud of this team, what they're doing. With them, we can continue to achieve 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. If you have any further questions, Martino is open night and day. Feel free to call him. He is 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. 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. It's good to see that we've been followed. A lot of you have been strong supporters of Endeavour, 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 shareholders, we need to stick to fundamentals, at the end of the day, the market goes back to fundamentals.
We have all the features with Endeavour to deliver the key targets and ensure good return to our shareholders and for our investors. 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. For those that coat check, you can leave your coats here and then come back and get them afterwards. You can applaud Sébastien now. Thank you.