Good day, and thank you for standing by. Welcome to Endeavour Mining fourth quarter and full year 2025 results webcast. At this time, all participants are in listen-only mode. After management's presentation, there will be the question-and-answer session. For those who wish to ask a question, please dial in the phone line. Please note that due to time constraints, we will be prioritizing questions from covering analysts. Today's conference call is being recorded, and a transcript of the call will be available on Endeavour's website tomorrow. I would now like to hand the call over to Endeavour's Vice President of Investor Relations, Jack Garman. Please go ahead.
Hello, everyone, and welcome to Endeavour's Q4 and Full Year 2025 Results Webcast. Before we start, please note our usual disclaimer. On the call today, I'm delighted to be joined by Ian Cockerill, Chief Executive Officer, Guy Young, Chief Financial Officer, and Djaria Traoré , Executive Vice President of Operations and ESG. Today's call will follow our usual format. Ian will first go through the highlights of the quarter and the year. Guy will present the financials, and Djaria will walk through our operating results by mine before handing back to Ian for his closing remarks. We'll open the line up for questions. With that, I'll now hand over to Ian.
Thank you, Jack. Hello to everyone who's joining us on the call today. 2025 was an outstanding year for Endeavour, in which we delivered a strong operational performance and record financial results. Over the course of the year, we produced 1.2 million ounces at an all-in sustaining cost of $1,433 per ounce. We achieved the top half of our production guidance with costs in line with a guided range on a royalty-adjusted basis. Our safety record remained sector leading. Our strong operational performance, coupled with high gold prices, translated directly into free cash flow. We generated a record $1.2 billion of free cash flow. That's equivalent to over $955 for every ounce of gold that we produced.
This cash generation enabled us to quickly deleverage our balance sheet to just 0.07 times Net Debt to EBITDA by year-end, which is well below our through the cycle target of 0.5 times, positioning us to significantly increase shareholder returns and invest in our exciting organic growth pipeline. For 2025, we returned a record $435 million to shareholders. That's equivalent to $360 for every ounce of gold that we produced and 93 above our minimum commitment for the year. That's truly a sector-leading return. Looking forward, we are already increasing returns with a commitment to over $1 billion minimum dividend over the next three years that we expect to supplement, assuming current gold prices, with at least another $1 billion of additional dividends and share buybacks.
Importantly, shareholders are not the only stakeholders benefiting from our strong performance. We also contributed $2.8 billion to our host countries. That includes $919 million of direct contributions to our host governments. We significantly increased our in-country procurement spend, reiterating our commitment to our in-country partners and strengthening the resilience of our business. As we transition into a phase of increased focus on organic growth, we continue to advance the Assafou feasibility study towards completion, which is expected in a few weeks. The key environmental and exploitation permits have already been approved. That significantly de-risks our timeline to first gold , which is targeted to H2 2028. Our exploration program discovered 1.5 million ounces this year at Assafou, Sabodala, and Ity.
While we didn't fully replenish reserves, we are strengthening our exploration pipeline to ensure that we sustainably replace reserves, resources, and production depletion as part of our five-year exploration program, as well as adding new high return growth projects into our pipeline. We started 2026 with a strong operating momentum, and we will remain disciplined as we accelerate organic growth and shareholder returns, delivering on our strategic objectives. On Slide 7, in 2025, we show how we increased production by 10% year-over-year, driven by the full year contribution from our Sabodala-Massawa BIOX plant and the Lafigué projects. More importantly, at a realized gold price of $3,244 an ounce, our All-in Sustaining margin expanded dramatically to $1,811 per ounce. That's up 60%, 60% from 2024.
Our track record of achieving guidance speaks for itself, and we were pleased to extend that track record in 2025. That means we've now achieved or beaten guidance 12 times over the last 13 years. That demonstrates our operational excellence and the high quality of our diversified portfolio. Looking at the year ahead on Slide 9, group production is forecast to remain relatively stable, as increased production at our Sabodala-Massawa mine will be partially offset by a planned lower production at our Houndé and Lafigué mines. Which are entering a short phase of lower grades associated with higher stripping activity. All-in Sustaining Costs are expected to increase primarily due to the cost impact of this phase at Houndé and Lafigué.
We'll also see the impact of the increase in Côte d'Ivoire's sliding scale royalty rates from 6% - 8% and a weaker dollar-euro Forex assumption for the year. Nevertheless, we'll continue to generate exceptional margins, and we expect to see cost improvements from 2027 as Houndé and then Lafigué complete their current phases of stripping and transition back into higher grade material. As shown on Slide 10, we're firmly on track to achieve our 2030 production target of 1.5 million ounces, representing a 27% organic growth from this year. This growth will be driven by the targeted addition of production from Assafou and the incrementation growth that will be coming from Sabodala-Massawa. At Sabodala-Massawa, we continue to drive improvements in bulk throughput and recovery rates.
In the second half of the year, we are starting some underground development to support high grade underground ore through the CIL plant. Importantly, we expect to achieve this growth while improving All-in Sustaining Costs, positioning us again in the lower quartile by 2030. Our production growth last year, combined with strong gold prices, supported record operating cash flow and record free cash flow of $1.2 billion in 2025. That's equivalent to $955 of free cash flow for every ounce of gold produced, and we'll continue to maximize cash flow for every ounce of gold we produce. We're chasing margins and not just chasing ounces. This strong cash flow helped rapidly de-deleverage our balance sheet that Guy will walk us through shortly.
The free cash flow outlook for 2026 is strong, with us well-positioned relative to our gold peers due to stable production and CapEx year-over-year. The completion of our hedging program and improved gold prices. Importantly, the gold mining sector is still good value for money relative to other sectors. On Slide 13, for the year, we returned a record $435 million to shareholders. As I said, $360 for every ounce that we produced. Now, since we started paying shareholder returns five years ago, we've returned $1.6 billion or 83% above our minimum commitment, and we have increased dividends per share and total returns per ounce produced every year, a trend we expect to continue in this higher gold price environment.
As shown on Slide 16, our 2025 returns compared very favorably with our peers, both on a per ounce basis as well as in terms of yield. While the gold sector has not historically delivered an attractive yield compared to other sectors, we see that changing, and we want to maintain it to remain a sector leader, so that we're not just attractive for gold investors, but appeal to a wider investment base that seeks reliable yield in a macro landscape of rate declines. In January, we announced our updated shareholder return program for 2026 through 2028. We will return a minimum of a billion-dollar dividend over 2026 - 2028, and that's based on the assumption of a gold price of $3,000 per ounce, and similar to our previous program, at high gold prices, we'll supplement that minimum.
As I mentioned, we've paid 83% above the minimum over the past five years, and we'll do that. With gold prices where they currently are, we expect total returns to more than double our minimum commitment over the next three years. Moving on to growth and our flagship Assafou project on Slide 18. We're progressing very well and the project remains on track with key environmental and exploration permits now approved. That significantly de-risks the project pipeline.
The feasibility study mine plan is expected to be well-aligned with the pre-feasibility study plan. The feasibility study will incorporate higher CapEx due to optimizations following additional grade control drilling results, a more scalable processing plant design that can be expanded in future, and an extended road and power line diversion, which is aligned with both community and government requirements, which will bring slightly higher initial capital costs. More detail on the feasibility study will be released at the end of this quarter as we formally announce the results of our feasibility study in a separate standalone presentation. On Slide 19, I wanted to highlight some resource expansion and permit consolidation that we have been busy with at Assafou and across the wider belt.
We increased Measured and Indicated resources by 13%, largely thanks to the maiden resource at Pala Trend 3, which is the first satellite target that we've defined at Assafou. While the resource is initially quite small, it is less than 2 kilometers away from Assafou. It's over 1.5 grams per ton of oxide material that starts from surface. It supports significantly increased operating flexibility at Assafou, and we expect it to be the first of many satellite resources that will ultimately support the upside at Assafou. Our strategic partner, Koulou Gold, has also successfully acquired the permit to the south of Assafou, in addition to their permit to the east, helping to consolidate this highly prospective underexplored belt. Exploration has been our most significant value creator over the last 10 years.
We have now discovered more than 22 million ounces of measured and indicated resource for a discovery cost of less than $25 per ounce, including discoveries of the cornerstone Massawa and Assafou deposits. This year, we discovered 1.5 million ounces at Assafou, Sabodala, Massawa, and Ity, which only partially offset the production depletion and model optimizations that took place across the balance of our portfolio. Over the next five years, we are targeting the discovery of between 12-15 million ounces of measured, indicated, and inferred resource. That target comprises 6-9 million ounces of our existing operations to replace production depletion and up to 6 million ounces from greenfield resources, including the potential discovery of up to two or three new projects focused on strengthening and diversifying our long-term greenfield pipeline.
As outlined on Slide 22, despite Endeavour Mining's strong performance and strong outlook that is underpinned by substantial organic growth, we still have a compelling value proposition, not only amongst gold peers, but across most other sectors as well. As we continue to deliver consistently, invest in sector-leading organic growth, and deliver sector-leading returns while retaining our disciplined approach to capital allocation, we expect to unlock even more value. As a long-term partner in West Africa, our resilience is underpinned by our ability to continue to deliver value to all our stakeholders. In 2025 alone, we contributed $2.8 billion to host economies, including $919 million in payments to host governments in the form of taxes, royalties, and dividends, and $270 million in wages, and $1.6 billion on procurement in country.
We also maintained our strong ESG track record, which is a reflection of our consistent commitment to excellence in ESG. This is best shown in our impact over the last five years. Since 2021, we've delivered more than $11 billion in total economic contribution, including $3.3 billion to host governments and $6.6 billion in local procurement. Beyond this economic contribution, we have made tangible impacts to local livelihoods through our social investments, including providing 55,000 people with access to quality healthcare, 38,000 children with educational support, and nearly 10,000 people with economic development opportunities. Generating shared value that benefits all our stakeholders is key to sustaining our success. I encourage you to view our sustainability report that we've published today.
With that introduction, please, let me hand you over to Guy, who will take you through the financials in more details. Over to you, Guy.
Thank you, Ian. Hello, everyone. As Ian mentioned, 2025 was an exceptional year financially for Endeavour, with record results across all key metrics. We produced 1.2 million ounces at an All-in Sustaining Cost of $1,433 per ounce or $1,305 per ounce when adjusted for gold price-driven royalties. With a realized gold price of $3,244 per ounce, we generated record Adjusted EBITDA of $2.3 billion, up 75% year-over-year, and adjusted net earnings of $782 million, up 244% year-over-year. Free cash flow reached another record $1.2 billion, up 269% from 2024. Turning to slide 25.
For the fourth quarter specifically, production increased by 34,000 ounces to 298,000 ounces due to higher grades across the portfolio in line with the mine sequence. Our All-in Sustaining margin also increased to $2,225 per ounce, a $547 increase compared to the prior quarter due to improved gold prices. On slide 26, we can see that the improved gold price translated into a 46% increase in Adjusted EBITDA for Q4 as we generated $681 million, with our Adjusted EBITDA margin also increasing quarter-on-quarter. The higher EBITDA naturally drove an improvement in operating cash flow, as shown on slide 27.
Our operating cash flow in Q4 was up 97% from Q3 to $609 million, benefiting from the higher Q4 production, higher realized gold prices, and seasonally lower tax, sorry, cash taxes. The operating cash flow bridge on slide 28 shows the key drivers of the $300 million dollar increase from Q3 - Q4. The realized gold price increased by $626 per ounce, which added $208 million of operating cash flow. Gold sales increased by 44,000 ounces, contributing a further $156 million.
Cash operating expenses were up $177 million due to increased production, increased royalties due to gold prices, and increased royalty rates in Côte d'Ivoire. Income taxes paid decreased by $44 million due to the seasonality of cash tax payments and the typically lower payments in Q4. Working capital improved by $69 million as the buildup of inventories and VAT receivables slowed and was offset by a slight increase in payables at the end of the year. I highlighted that we were expecting to see improvements in our working capital last quarter, and pleasingly, Q4 was a significant improvement over Q3. This year, we're expecting this to improve further.
We expect to further reduce inventory as we start drawing down on stockpiles at Lafigué and Houndé, as we will be relying on stockpiles to support the mill feed during H1 as we concentrate on stripping at both sites in line with mining sequence. We expect our VAT receivables to also improve as the timing of the VAT recovery cycle normalizes in Côte d'Ivoire and Senegal. In Burkina Faso, we will continue to convert our VAT receivables into marketable debt instruments and sell them on the open market. Free cash flow in Q4 reached a record $476 million, up 187% from Q3, driven by the stronger production, higher gold prices, and lower seasonal taxes.
For the full year, free cash flow was $1.156 billion, up 269% from 2024, marking a significant inflection in our cash generation capability following the completion of our last growth phase. It is pleasing to be converting strong operational performance into free cash flow, we are effectively and efficiently upstreaming that cash to support our increasing shareholder returns. Last year, with great support from our host nations within the West African Economic Union and the Central Bank of West African States, we successfully upstreamed $1.2 billion, leveraging our annual cash upstreaming model, which serves us and our in-country stakeholders very well as it provides early visibility on cash movements, foreign exchange requirements, and minority interest dividend withholding tax quantum. Moving on to slide 30.
The change in net debt bridge on the slide shows how we're able to rapidly deleverage the balance sheet. We started Q3 with net debt of $453 million and generated operating cash flow of $609 million. After investing activities of $133 million and financing activities, including dividends and buybacks of $181 million, we ended the quarter with net debt of just $158 million. This represents a comfortable leverage level of only 0.07 times, down from 0.21 times at the end of Q3, and well below our through-the-cycle target of 0.5 times.
We reduced our net debt by $574 million and also reduced our gross debt by $511 million last year, leaving us with over $1.1 billion of liquidity available through our cash on hand and our undrawn RCF. Finally, turning to earnings on slide 31. I won't go through every line item, but just a few of the highlights. We generated $665 million of earnings from mine operations for Q4. We recorded $193 million of impairments, largely across exploration properties, including, in particular, Bantou, Nabanga, and Kalana, as we don't expect to do any exploration work in the near term and don't see potential for Endeavour-type assets at any of these properties. Other expenses increased to $44 million.
This does include $37 million of incremental royalties for 2025 at our Ity and Lafigué mines in Côte d'Ivoire, where the royalty rates for 2025 were retroactively increased from 6%-8%. The net losses on financial instruments of $62 million were mainly due to realized losses on gold collars, partially offset by unrealized gains on marketable securities. Last year, the tail end of our hedging program created a significant headwind to our earnings and our free cash flow, given the strong gold price environment in particular. Pleasingly, this year, we are fully unhedged and expect to realize the full benefits of this favorable gold price environment. During the quarter, we recognized a $52 million deferred tax recovery in the quarter as deferred tax liabilities decreased following the impairment of our exploration properties, which I referenced earlier.
Adjusted net earnings reached $293 million or $0.93 per share for the quarter. Thank you, and I'd like to hand you over to Djaria.
Thank you, Guy, and hello, everyone. Before discussing our operating results, I want to start with safety, which remains our top priority. I'm pleased to report that we've maintained our industry-leading safety performance in 2025 with a Lost Time Injury Frequency Rate of just 0.07, which position us as one of the safest operators in the gold mining sector. Before turning to the mine-by-mine review, I wanted to touch on our P&P reserve and resource evolution. During 2025, our P&P reserve decreased by 10% or 1.8 million ounces to 16.6 million ounces, driven by 1.4 million ounces of production depletion and the optimizations of several of our reserve models to incorporate updated cost assumptions.
The decrease was partially offset by an increase in reserves gold price from $1,500 per ounce to $1,900 per ounce. However, we have not realized the full benefits of this increase as we have not yet updated the pit shells at Sabodala, Massawa, and Ity mines. The full benefits of the higher gold prices is expected to be realized next year when these pit shells are updated. M&I resources also decreased slightly by 4% of 1.1 million ounces to 25 million ounces, which is due to 1.6 million ounces of depletion and resource models optimizations, which was partially offset by 1.5 million ounces of discoveries at Assafou, Sabodala, Massawa, and Ity.
As part of our new exploration strategy, we are focused on replacing production depletion at our existing assets, while adding up to 6 million ounces of resources at new greenfield projects to support our long-term growth, organic growth. On slide 35, you can see an overview of our portfolio performance and the 2026 outlook. In 2025, we've achieved a production growth across Sabodala, Massawa, Mana, and Lafigué, while production was lower at Houndé and Ity mines. Looking ahead to 2026, we expect further production growth at Sabodala, Massawa due to continued improvements through the BIOX plant. This increase will be offset by lower production at Houndé and Lafigué, where, as Ian mentioned earlier, we will be mining and processing lower grades and prioritizing waste stripping.
All-in Sustaining Costs are expected to increase this year, largely due to an increased focus on waste stripping at Houndé and Lafigué, which will lead to the processing of lower grade ore and a reliance on stockpiles to supplement the feed. In addition to that, the higher royalty rates in Côte d'Ivoire and the lower USD Euro Forex has driven our All-in Sustaining Cost guidance higher. We expect costs to start to improve next year as this phase of stripping is completed at Houndé and Lafigué. On a longer term, we are tracking well towards our 1.5 million ounces target by 2030. As we incorporate higher grade at Sabodala-Massawa, Houndé, and Assafou in the coming years, we expect to be in the first cost quartile when we got to that 1.5 million ounces target.
On slide 36, with Sabodala-Massawa, we've delivered a strong performance in 2025, achieving the top half of our production guidance range with costs within the guidance range on a royalty-adjusted basis. Production increased 20% year-on-year as the BIOX plant had a full year of production. We expect to see further increases this year as the BIOX throughput continues to increase, targeting 15% above design nameplate, while recoveries continue to improve towards the 85% target. At the same time, we are starting to develop the Golouma underground deposit to incorporate the high-grade non-refractory underground ore into the mine plan from 2027, supporting a continued production growth and cost improvement. Moving to Houndé on slide 37, where we've achieved near the top end of our production guidance range last year, with cost beating guidance on a royalty-adjusted basis.
The strong performance was largely due to high grade from the Kari Pump. As Ian mentioned earlier, Houndé will focus on waste stripping at the Vindoulou main deposit this year, and as a result, we will be mining lower grade and drawing down on stockpile to supplement the mine ore feed, which result in a slightly lower production and higher cost. As stripping advances, we expect to see grade and cost improve through the year and notably into next year, 2027. Longer term, we are excited by the underground potential at Houndé, and we expect to declare a maiden resource for the large high-grade Vindoulou Deeps deposit during H1 this year.
At Ity on slide 38, we've achieved the top half of our production guidance with cost in line with the range supported by strong mill throughput that has benefited from the use of supplemented mobile crushers. Production is expected to be stable year-on-year, while costs will be higher due to a slight increase in sustaining capital related to waste stripping at Ity, Zia and the La Plaque pit, but as well as the increase in sliding scale royalty rate in Côte d'Ivoire from 6% to 8%. At Mana on slide 39, as expected at Mana, the accelerated development rates improve access to higher grade underground source, supporting a stronger productions in the later part of last year.
As a result, we've achieved the top half of our production guidance, while costs were above the top end of the range, reflecting an increased development and cost which were associated with a contractor changeover. This year production at Mana is expected to be stable as underpinned by improved development rates from our consolidated single contractor underground mining model, coupled with a small volume of open pit feeds in the mine plan. These two elements are expected to be support an improved throughput year-over-year, which will largely offset the impact of slightly lower grade in the mine sequence. We are continuing to work on improving cost at Mana, prioritizing improvement in grid connection, power stability, as well as underground mining productivity. Finally, turning to Lafigué on slide 14.
We've achieved our production guidance with above the top end of the range due to higher mining volumes required to support the improved processing throughput rates as the plant continued to deliver well above design template. For 2026, similar to Houndé, Lafigue will be prioritizing stripping activity to improve access to higher-grade ore. The mill feed will be supplemented with lower-grade stockpiled material, which, combined with the increase in sliding scale rates of royalty in Côte d'Ivoire, is expected to result in slightly production and higher cost year on year. Thank you, everyone. I'm now handing back to Ian for the closing remarks.
Thank you, Djaria. As we look ahead, we're extremely well-positioned to continue creating value for all of our stakeholders. Given our strong operational outlook and high gold prices, we expect to generate very strong free cash flow, which, given our low leverage, will be used to deliver sector-leading organic growth and sector-leading shareholder returns. Thank you for listening. Now let me hand you back to the operator, and let's open up for Q&A. Thank you.
Thank you so much, dear participants. As a reminder, if you would like to ask a question over the phone, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one and one again. Please stand by while we compile the Q&A queue. This will take a few moments. Now we're going to take our first question. It comes to the line of Alain Gabriel from Morgan Stanley. Your line is open. Please ask your question.
Yes. Good morning and good afternoon to everyone. Just, thank you for taking my questions. Ian, I have a couple of questions. First, can you confirm on your capital allocation that you are thinking about $1 billion of supplemental buybacks and special dividends above and beyond the minimum $1 billion that you have set? If so, what are the next milestones, timelines, and signposts to unlocking these additional returns? Is it the AGM? Is it the Q1 results? How should we be thinking about it? That's my first question. Thanks.
Okay. Thanks, Alan. Yeah, look, just for clarity, we said that the $1 billion over three years is the minimum that we'd be sort of targeting to hand out to shareholders. That assumes maintaining a minimum gold price of $3,000 an ounce. What I was saying is that if you take current spot prices, the very real prospect of an additional $1 billion, that will be made up of supplementary cash dividends as well as buybacks. The buybacks will continue on an opportunistic basis, and they will form part of that additional $1 billion.
Thank you. On that question, on the second part of your question, on your answer, is it should we wait for the AGM for an authorization for the next leg of the buyback or what are the next milestones that we should be waiting for?
No, no. Sorry. Yeah, I should have been a little bit clearer there. Look, I mean, we've already decided, you know, there's not a fixed number in terms of buybacks. It is going to be opportunistic. It will follow what we have done previously. You know, buybacks form part of the broader capital allocation framework, you know, prioritizing where we get best return on our investment. As in when we see the opportunity to affect a buyback and get the sort of returns that we're looking for, you know, they will happen automatically. The, there's no further sort of approvals needed because in principle, it's already been agreed that we should be doing it.
Thank you. That's very clear.
Sorry, Alain. I was just gonna add, I don't think you should expect that at the AGM we'll come out and, you know, revise the shareholder returns program per se. Your, your first clear indication is gonna be probably at the time that we're declaring the next dividend. We're effectively saying we see our way clear at these gold prices. What we will be waiting for is effectively a period in which, for example, the first half we've earned that cash and therefore we will look to distribute to shareholders and that would be the dividend declaration. We're not looking to revise the shareholder returns program through the period.
Thank you. Thank you. Very clear. My second question is on Assafou. I think Ian, in your presentation as well, you touched on the cost being slightly higher than initially anticipated. But also the size of the project resources is also expanding, continues to expand. Can you give us some preliminary hints or indications as to the scale of the increase in CapEx? Given what you've learned in the last few months, on production and profile, the production profile and the economics, anything that you can give us in advance of the full feasibility study that you expect to release before the end of the quarter? Thank you.
Yeah. No, look, I'm not gonna be sort of specific. The increases, you know, are not out of the ordinary. They are linked as much to changes in scope for the project, you know, some subtle design changes. You know, we've picked up on, say for instance, Lafigué, because obviously, you know, Assafou is very much the fundamental design is predicated on what we have at Lafigué. Also on what we've learned at Lafigué, what went well, what, you know, didn't go so well, and having looked globally at other projects, using sort of HPGRs and making sure that, for instance, our comminution circuits , you know, are fit for purpose, robust and, you know, are going to work well. There is modest increases.
I mean, you know, escalation is there. I think everyone is seeing, you know, cost creep on these things. We will be in a position by the end of this month, you know, to have finalized the numbers. It would be premature to give you the, you know, sort of even an indication at this stage. You know, the number will be going up, but not dramatically.
Thank you. Understood.
Thank you so much. Now we're going to take our next question. The next question comes the line of Ovais Habib from Scotiabank. Your line is open. Please ask your question.
Thanks, operator. Hi, Ian and Endeavour team. Congrats on a solid year. Just a couple of quick questions from me. You already answered the question on Assafou CapEx, so that's all good. Just moving on to, keeping on Assafou, maybe talking about, you know, Pala Trend 3. You know, looks like, you know, good oxide resource there, good grades there. Will this be included in the DFS? If not, would it be safe to assume that these ounces will come into the mine plan in the front end of the mine life?
Yeah. Ovais, yeah, look, again, just for clarity, no, they will, Pala Trend 3 ounces are not included in the feasibility study. Because it's, you know, as you said, it's very, very close to the actual mine and to the plant, it's oxide material. It just gives you greater sort of mining optionality and flexibility. You know, we're seeing even more sort of resource in and around and in close proximity to the plant. It's, you know, the upside over and above the basic mine plan, you know, it's more than just Pala Trend 3.
There are other satellite deposits in close proximity to the plant that will ultimately be included and will form part of the natural, should we call it, evolution and expansion of this plant. As we get it up and running, as we debottleneck, you know, as we start to probably operate beyond the 5 million tons, we don't need to include them in the feasibility study, but they will form, I think, a natural sort of upside to the project, you know, and probably will be in the early part of the project because it's so convenient to get it close by.
Thanks for that, Ian. Just again, you, as you were talking about those other satellite targets that you guys are probably targeting, I mean, is this Sonia targeting those areas right now in the 2026 drilling program, or is this gonna be more once production starts, then you'll continue doing more exploration around the area?
We haven't really stopped from the time that we started doing, you know, all the exploration drilling around there, Ovais. It's not as if, you know, we've got to start doing it. You know, these are, you know, projects that have already been identified. Some of them we've done some initial scout drilling, some, you know, more advanced than others. I think what I'm really basically trying to say is that this is a, it's a permissive area. There's lots of opportunity, and it forms a natural sort of extension to the existing broader regional program in and around Assafou.
Perfect. I don't know if Sonia is online, but just wanted to see if you know, where she's more excited about this 2026 exploration program.
look, she's not here at the moment, but what I can tell you is that, we've been doing a lot of very interesting work, at Sabodala. You know, we've been applying a lot of, doing some lot of AI, work on, on that permit. We've identified a significant number of targets. Applying this technique, over our existing deposits. You know, it identified 99% of the, of the, deposits that we already know about. The fact that we've got a very interesting number of new projects gives me a lot of hope, that, you know, we'll be finding some more stuff.
Effectively, what we've done, Ovais, is we started to join the dots 'cause we, as you know, we've got lots of deposits in around, but our knowledge and understanding of how they all interconnect, you know, has been somewhat disjointed. We're starting to fill in the gaps in our knowledge. We're very excited for 2026 about what's there, and then we're going to take this technique and this technology, we're applying it to Ity South as well as Ity Main. We'll also apply it on our East Star joint venture in Kazakhstan, where we've got a massive area. Using this technology to help us zero in, you know, on target areas as opposed to just trying to cover the whole area, makes a huge amount of sense.
Lots of prospect. The other area in more immediately is Vindoulou Deeps at Houndé. We are very, very close to sort of publishing the results of that study. It wasn't quite ready in time for this year's declaration. You know, there's gonna be not far short of a 1 million ounces going into resource at Vindoulou Deeps . That's high grade, good quality. I know that Djaria can't wait to get her hands on that.
That was good. My last question, just moving on to Sabodala-Massawa. Djaria mentioned that you're developing Golouma to come into production in 2027. Are there any other satellites that could come into production in the near term to improve the offsite production?
Thank you, Ovais. I think, yes, as you mentioned, we are currently busy finalizing the commercial decisions which contractors select for Sabodala. That should be done sometimes by the end of quarter one, so that we can start mobilizing equipment into each tour this year. We expect that next year will be in and around development to start seeing the first ounces sometimes in 2028, really, which is the really high-grade ore that we needed for the CIL plants. We are working very closely with Sonia, obviously, to see as Ian just mentioned, what are the other target that we can see in and around Sabodala-Massawa. I'm sure that the next call we'll be able to start giving you some hints in that as well.
Okay. Thanks a lot, Djaria. That's it from me. Thanks for taking my questions.
Thank you.
Thank you so much. Now we're going to take our next question. The question comes line of Fahad Tariq from Jefferies. Your line is open, please ask your question.
Hi. Thanks for taking my question. Apologies if I missed this. Can you walk through the thought process of using $3,000 an ounce gold to set 2026 guidance? Thanks.
It was simply a question of, you know, choose a number. You know, the classical approach that we have taken historically is that, you know, we give forward guidance on our dividend program. We select a number, and then based against, you know, our anticipated production and cost profile, we know what our cash generation should be. We're comfortable in guaranteeing that sort of number. Over and above that's when we say there'll be supplemental returns as well. ZWF 3,000 was just chosen as a number. We could have taken another number, but we felt comfortable with ZWF 3,000 over the next three years.
It's an indication to investors if you've got that sort of gold price environment, that's what you should anticipate should be coming your way in the form of dividends as a guaranteed.
Okay. Maybe just my question is more on just setting the cost guidance in particular. Maybe let me ask a different way. If I think about the year-over-year increase in the AISC guidance from 2025 - 2026, how much of that would be the higher royalty structure versus the increased waste stripping at Houndé and Lafigué? I'm just trying to get a sense of how AISC could potentially come down in 2027 once the stripping is complete.
Let me try and answer. The 3,000 is obviously relatively conservative in terms of current spot prices, but we do like to use fairly conservative gold pricing for budget purposes and cost control in the first instance. When it comes to, I think the second part of your question, which was 25-26, if you take a look at the overall cost per ounce increase, roughly 15% of that is made up of royalty rate increases and foreign exchange. The remainder is effectively down to the mine sequencing, which includes a proportion of stripping activities at Houndé and Lafigué, which we mentioned, as well as the cost of stockpile drawdown. Those two factors combined constitute about 85% of that cost increase.
Got it. Okay, that's super clear. Yep, that's it for me. Thank you so much.
Thank you. Now we're going to take our next question. The next question comes line of Marina Calero Ródenas from RBC Capital Markets. Your line is open. Please ask your question.
Good afternoon. Thanks for the call. I have a couple of questions. The first one is on your reserves. You mentioned that Ity and Sabodala are have the reserves calculated using the $1,900 per ounce price. I was wondering if you could give us a bit more details about that and how would your group reserves look like if those prices were used across the entire portfolio.
Sorry, Marina. I didn't get you. It was a bit garbled. Could you repeat the question again, please?
Is now better? Can you hear me now?
Yeah, that sounds much better. Thank you.
Okay. Sorry about that. I was just asking you about your 2025 reserve statement. I noticed that you're not using the $1,900 price for Sabodala and Ity. I was just wondering if you could give us a bit more color about that and how your group reserves will look like if the same prices were used across the entire portfolio?
Yeah, sorry. Now, I understand the question. Look, I think what we have to recognize is that, you know, last year there was massive dislocation on gold prices. For us to get to produce, you know, truly accurate answers about reserves, you know, you actually have to change pit shells. You know, the pit shells also have to align. It's not just a question of changing the prices. To be honest, we just, for the two mines that you mentioned, Sabodala and Ity, we just didn't have a chance to do the changes in the pit shells. They will take place later on this year. From that, you know, we'll see what changes have taken place.
What we are seeing though, and this is a very sort of generic statement rather than anything specific about these two operations, is that the intrinsic quality of our reserve base and the relatively flat grade tonnage curves that we've got from our operations means that major changes in the gold price doesn't necessarily have a significant impact on, you know, our reserves either going up or going down. You know, we still need to do the proper engineering with the correct price, pit shells, and we simply just didn't get round to didn't have the time to get round to doing it for those two specific mines.
It will be done later this year, and then as we update in the middle of the year, we'll see those changes coming through, as we'll see also the updates coming through from Houndé, which we'll be able to produce fully QP'd resource and reserve statements from there, from Houndé as well.
Just another question on cost. Can you comment on the main inflationary pressures that you're seeing? Maybe as an extension of that, what is the sensitivity of your own sustaining cost, if any, to the oil price?
Sure. On the first one, in terms of inflationary pressures, we've got somewhere in the region of two-thirds to three-quarters of our costs are effectively local denominated costs in CFA or ZWF. That local currency is pegged to the euro. As a result, we see relatively benign inflation for the vast majority of our cost base. If you break down the cost base into its key elements, you'll have labor, which in West Africa we are very lucky to have a great supply of people, well experienced people. As a result, we haven't seen the level of labor inflation that is necessarily being seen in other territories around the world. Local inflation, I think as a result of the pegging, also means that the...
There isn't runaway local inflation that again, you may see in other territories. The fiscal dis-discipline and policy of the regional central bank fundamentally helps us from an inflationary perspective across the majority of our costs. In addition to that, we've obviously got medium long-term contracts that help us manage over time, associated with agreed to contractual rise and fall. There again, that's on our side rather than helping it from an inflationary perspective. More importantly to the second part of your question, oil or energy represents a fairly significant proportion of our cost base as well.
It's important to note that the three host nations in which we're operating all have relatively strict sets of pricing mechanisms, whereby the vast majority of host nations are maintaining a very low level of volatility of fuel prices on the ground to international oil prices. We have not seen either the highs or lows in terms of volatility that other countries have seen over the last number of years. On top of that. The vast majority of fuel that is supplied into West Africa is not coming from the Middle East. Our actual reliance in terms of security of supply is much more focused to Northwestern Europe and Africa itself. Consequently, when we look at oil shocks, we tend to see it more as a question of pricing rather than security of supply.
Even with that pricing, because of the government's pricing mechanisms, volatility is not significant for us from an All-in Sustaining Cost perspective.
Excuse me, Marina. Any further questions?
No, that's all I have. Thank you.
Thank you so much. Now we're going to take our next question. The next question comes to line of Alex Balk from Stifel. Your line is open. Please ask your question.
Yes. Good day, everyone, and thanks for taking my question. Just one, simple question for me. Guy, I want to pick up on something you alluded to earlier when you said Endeavour-type assets when referring to the exploration impairment. At this point in time now, what constitutes an Endeavour-type asset, and has that changed in the last couple of years?
Thanks very much. No, it hasn't changed. You're right. It's a shorthand, but what we're talking about is the same key elements that we would have always described as an Endeavour-type asset. It's life of mine, cost profile, and size, i.e., annual production. They're the same.
What sort of thresholds are we looking at? Is it minimum $250-
Oh, sorry.
-1,000 ounces?
Exactly. It's 250,000 ounces annual production, it's 10 years plus, and it's first quartile cost producer.
Okay. Thank you very much.
Thank you.
Thank you. Now we're going to take our next question. The question comes to line of Frédéric Bastien from BMO Capital Markets. Your line is open. Please ask your question.
Hello. Good afternoon. Tim, well done on a good year. Just two questions from me, as Seva has already answered them for me. First on Koulou, given your 19% position in the company, should we think about as a stake, think about stake as primarily as an investment today, or is that one that carries a longer term strategic value in the portfolio? Second question, you know, given there's been bit of industry discussion around royalty rates in Côte d'Ivoire, when you think about the costs over the long term, what are the sort of key operational or financial levers you can mitigate or offset against the royalty pressures when you look at project economics? Thank you.
Yeah. Look, I mean, we've been involved in Koulou Gold for several years now. We think it's a very interesting project. I think everything that we saw right from the get go, the more that the guys look, the more that we appreciate what's there. That whole southeastern corner of Côte d'Ivoire is turning into a very interesting from a geological perspective because it's not Birimian, it's not Tarkwaian, it's really the transition between the two. What you have is you have Birimian type grades, but you have Tarkwaian type, should we call it, size and scale. It makes it a very, very interesting part of the world. You know, at a 19% stake, you know, we're comfortable with where we are.
We have someone who sits on the board, and we're watching very closely what is going on there. You know, we have good cooperation with Kulu. On the royalty, I'm gonna pass you over to Guy. Guy has been very much involved with the discussions with the government on royalty. Guy, over to you.
Thanks, Ian. I think your question around the royalty is more where are the opportunities to offset an increasing royalty, environment. Is that the question?
Yes, that's the question. Yeah.
I'll start off, and I'm sure Djaria may want to add here as well. If we look at fundamental offsets, I would suggest it's probably in a couple of areas. The first and most obvious one is just day to day, month to month, year to year productivity gains. We do whatever we can to be mining and processing on a more efficient basis, and we have a productivity program in place across sites that is going to play a partial role of offsetting the royalty cost.
The other piece, and the one that we're trying to talk about in today's slide deck, is also just to maintain a perspective that we will continue to add higher grade options to our portfolio, and that's through obviously exploration in the first instance, but then through, as you mentioned earlier, investments in the likes of Kulu. The ability for us to do that, from a diversification perspective and ensure that we're improving grade, being fed into the mills is naturally going to be assisting us in terms of cost.
One thing which I think is longer term, which I don't want us to lose sight of, is new growth based on that exploration in West Africa comes at a lower capital intensity. Those three elements for me would be key offsets, in West Africa in total. Specifically to your question, in Côte d'Ivoire as well.
If I can, just to add in there, just to reiterate what Guy had mentioned, is really for us in terms of operations to look at way of reducing mining costs. That really goes through several opportunities, initiatives that we're currently putting in place with the team on site. Obviously we do know about the Ity donut. We also know about the Ity, Gran Pit. What it allows us to do is to be able to look at different type of equipment, either bring in bigger equipment or just a mix of equipment so that we ensure that we optimize those costs. That's one of the lever. The other ones in terms of our fixed plant is to ensure that we keep our throughput optimal, maximize it.
If we are at capacity, is to, again, is really to look at different initiatives to ensure that we are processing those ore, high-grade ore that we have. I think, it's really, again, with the team to think outside of the box. What are different levers and different initiatives that we can put in place on a daily basis?
Okay. Thank you. That's crystal clear. Thank you for the comprehensive answer. Over to the operator. Thank you.
Thank you. Now we're going to take our next question. The question comes line of Mohamed Sidibé from National Bank. Your line is open. Please ask your question.
Hi, Ian and team, thanks for taking my question. Maybe if I could just follow up on the royalty rates and not necessarily in Côte d'Ivoire, but just if you could comment on anything that you may be seeing either in Burkina or in Côte d'Ivoire or Senegal as it relate to that pressure for potential higher royalty rates. We know that Côte d'Ivoire just went through, but any comments would be appreciated on the remainder of your portfolio. Thank you.
Look, I mean, as far as Burkina is concerned, I mean, the royalty rates in Burkina are well established. We know there's a sliding scale. You know, they're getting towards the top end. They are well known. As far as Senegal is concerned, you know, Senegal has not changed its mining code, you know, for quite some time. There's been a, you know, sort of some indication that they want to sort of change the mining code. We do, though, have a sort of a grandfathered project at Sabodala-Massawa, and that Sabodala-Massawa. That basically we're grandfathered till 2040. A mining convention.
If they want to change the sort of royalty rates and what have you, that is usually outside of any sort of mining convention that we've got. At the moment, Senegal is lower in terms of their overall rates. Much more favorable sort of overall taxation and royalty schemes than the other countries. You know, there's been some suggestion ventilated about them wanting to change that. I would argue that it's likely that the trajectory overall, you know, would likely increase because that seems to be the move everywhere. You know, it's not just here in West Africa, but even, you know, in other places around the world. Whilst we're not seeing or hearing anything definitive as yet, if it happened, you know, probably would not be a huge surprise.
As to quantum, size, change, or when, at this stage, totally unknown.
Thanks a lot for that, Ian. Just my final question on your targets for 2030, for 1.5 million ounces of production. I know that Assafou will be a big contributor to that, could you maybe help us, you know, reconcile, the potential contribution from Sabodala-Massawa, and Lafigué? Any color on those two would be appreciated. Thank you.
Yeah. Look, I mean, if you take the existing sort of five assets, you know, you could probably sort of look at a relatively steady performance coming from Mana. Houndé, you know, would be sort of the mid 200s, maybe slightly, you know, higher than the mid 200s. Ity would be its steady level plus minus 300. We'll likely look at a higher output coming from Sabodala-Massawa as part of the overall program we were certainly targeting by sort of 2028, 2029 to be somewhere into the low to mid 300s. I think as an indicative number, you know, that is the sort of target that we will be looking for.
Lafigué anywhere, you know, sort of guiding between sort of 180 and 200. You're coming in with Assafou, which in 2028 and then 2029. 2029 will be the first-You know, targeted first full year of production, but not at full rate. It will be in 2030 that we'll be getting the full rate at Assafou, which will be sort of in the low 300s.
Thank you. That's very clear. Thanks for taking my questions.
Thank you so much. Now we're going to take our last question for today, and it comes to line of Daniel Major from UBS. Your line is open. Please ask your question.
Hi there. Thanks. Can you hear me okay?
Yes, Daniel. Good afternoon.
Hi there. First question is a follow-up on the first question actually around capital returns. Encouraging to see the commitment to lifting cash returns. If we looked at free cash flow from the business, anywhere near to spot prices, you would significantly exceed $2 billion of capital of free cash over the next three years. I guess the question is: Is there a net debt target or net debt level at which you would make a commitment to shareholders to return 100% of free cash to in the form of dividends and buybacks?
Yeah. I, you know, I think we said all along that through the cycle, we wanted a net debt target of 0.5. Clearly, when we're not in a build program, that net debt would, you know, virtually go down to zero, maybe even occasionally just flick over a little bit. During the build program, you know, we'll be bumping up against that upper limit, you know, closer to 1x debt to EBITDA. You know, when the time comes, and assuming, you know, that we're in the fortunate position that we're generating huge amounts of cash, the way we structured our program gives us absolutely the flexibility to return as much as we can.
If there's no other sensible use of our sort of free cash flow, then of course it's gonna go back to shareholders 'cause it's shareholders' money after all. You know, what we've tried to do with our programs is give a base outline at the, what we as Guy called them, sort of conservative yet rational levels. Beyond that, you know, as and when we generate the money, it will get dished out to shareholders. I don't think there's any need for us to say, "Well, it's gonna be 100% or even less than that." You know, as the time comes, we'll see what we need to do with the business.
One of the last things we want, we don't want to do is we don't want to come through a period of, you know, really good gold prices just handing back all the money to shareholders and then making sure that our, you know, the business is not robust and resilient. As we come out the other side of this strong gold price, we wanna make sure that we have a business, we have a asset base which is in sound shape, you know. That may well require, you know, some additional capital injections in there. Again, everything will be done, assuming our normal sort of capital allocation program and making sure that, you know, we get the sort of returns that we're looking for as well.
Okay. Thanks. Second one, just on the portfolio. Mana is the lowest quality of your assets. Would you consider disposing it if a good offer came in? Is the first question. The second question, some assets in the region from one of the larger peers in Tanzania, DRC, may come to the market. Would you be interested in looking at any acquisitions in the region if they were to become available?
On Mana, first of all, you know, we're always asked the question about, you know, it's, you know, our poorest asset. I would advise people just look at the cash generation of Mana. You know, it's generating a lot of cash. It's more than adequately washing its face. If somebody wanted to come along and compensate us for that, you know, yeah. As I said all along, all assets ultimately are up for sale. It is simply a question of is someone prepared to pay for it. You know, bluntly, Daniel, we haven't had people banging the door down, you know, saying, "You know, we'd like to make an offer for Mana or for any other asset." That's fine.
You know, I'm very happy to continue running those assets as long as they are, you know, contributing to the bottom line. As far as, if I understand the thrust of your second question, you know, in terms of potential inorganic opportunities. You know, over the last 2-3 years, you know, we have looked at a variety of assets, all of which we have walked away from because they don't satisfy our return criteria. Does it mean that we, you know, are not going to do inorganic growth opportunities? Of course not. We are in the fortunate position that we have got a very strong organic growth pipeline, that is where our focus would be. It is also appropriate for us to look outside of that.
As and when opportunities arise, we can look at stuff, and if it makes sense, obviously, we would do it. Again, has to measure up and to be able to satisfy the sort of returns that we would be looking at as a group as a whole.
Excuse me, Daniel, any further questions?
No, that's it. Thank you.
Thank you, Daniel. Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks.
Thank you, operator. Thanks everyone for listening, we look forward to reporting back when we do our Q1 results for 2026. Look forward to it then. Thanks very much indeed cheerio. Bye-bye.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.