Hello everyone, I am Martino, Vice President, Strategy and Investor Relations. I'd like to welcome you to our Q2 and half year results webcast. On the call, I am joined by Sébastien, Mark, Joanna, and Patrick. Today's call will follow our usual format, where we'll first go through our quarter's highlights, then the detailed financials. Then we'll walk you through our operating results line by line. We will try to be as quick as possible to leave time for questions at the end. Before we start, please note the usual forward-looking statements. I'll now hand it over to our CEO, Sébastien, to take you through our results highlights. Sébastien?
Thank you, Martino. Hello everyone. We are pleased to report that we have continued our strong momentum from Q1 into Q2, which has positioned us well for the rest of the year. We've noted six recurring themes as displayed on Slide six, which summarize where we are focusing our efforts. In summary, our strong operating performance in H1 has resulted in robust cash flow generation. This strong performance allowed us to continue to execute our capital allocation strategy, which is focused on strengthening our balance sheet, maximizing shareholder returns, and investing in our growth. Looking at the balance sheet first, during Q2, we increased our net cash position by $141 million, while also returning $108 million in the form of dividend and buybacks to shareholders.
Speaking of our strong shareholder return commitment, we are pleased to declare today a H1 dividend of $100 million, which represent a 43% increase over last year's dividend. This is reflective of our improved financial position and confidence in our business outlook. Moreover, we are now targeting a minimum dividend of $200 million for the year, which is $50 million more than the initial minimum commitment. We are also continuing to supplement our shareholder returns with ongoing share buybacks. In terms of investing in our business, our key focus is the Nogbele-Massawa expansion project, we're very pleased with the progress that is being made as we remain on budget and on schedule. At Lafigué, the DFS is expected in third quarter of 2022.
We also made some exciting discoveries last year into this year, as such, our exploration program remains on track to discover 15 million-20 million ounces of indicated resources over the next 5 years. On the ESG front, we recently published our fifth sustainability report, which showcase how we are leveraging our increased size and scaling up our ESG efforts. Given we are now the largest producer in the region, we firmly believe that we can have a positive and lasting impact. Moving to Slide seven, you can see we have performed well across our key operating metrics. On the safety stat, we are proud to say that our lost time injury frequency rate remains lower and better than our industry peers at just 0.13 for the last 12 months. We continue to work on improving this and aim to achieve zero arm performance.
Looking at the quarter's production, you see that if you annualize it, we will exceed the top end of the full year guidance. Clearly, we are very well positioned against guidance, and we need to keep the momentum going through the remainder of the year. The same story can be seen with our All-In Sustaining Costs, which are sitting within the lower half of our full year guidance range. It's a great result, given the industry-wide inflationary pressures, which of course, we are not totally immune to, but we've been working hard to offset them with various initiatives. Joanna will provide more detail on our cost base in the next section, but at a high level, we've been helped by our long-term supply contracts, favorable exchange rate variation, the in-country fuel pricing mechanism, and of course, our production and cost optimization initiatives.
Turning to Slide eight, you see our production and cost trends on a half year basis. In gray is the portion related to our discontinued operation, which is comprised of the Agbaou and Karma mines, which were divested. Production was relatively flat between H1 this year and H1 last year, while it decreased slightly compared to H2 last year. In line with our mine plan, importantly, all-in, importantly, All-In Sustaining Cost is down $10 per ounce compared to H2 last year. To put this in context, as you see on slide 9, we've plotted the AISC guidance and H1 realized cost for our sector using the relevant companies that have published so far. As you can see, we are currently the lowest cost producer when ranked against senior and mid-tier producers.
We firmly believe that this low-cost positioning is now a strong competitive advantage, and we are pleased that the hard work to reposition our portfolio over recent year is now paying off. Moving to the next slide, you see our all-in sustaining margin trend. Given that we have maintained a low-cost base, we continue to benefit from the higher gold price environment, resulting in a 52% margin in the first half of the year. Next, on slide 11, you can see the trend of our operating cash flow before changes in working cap. We generated $622 million in the first half, which is nearly the same as the previous six months. On Slide 12, I would just like to highlight our operating cash flow after working capital.
You see here the seasonality of our working capital outflows ahead of the wet season, when we typically stockpile transitional and fresh ore in preparation for the rain. Managing the rainy season is an area where we have shown significant improvement over the past few years, and I feel we now have a good handle on this. On Slide 13, you can see how strong cash flow generation has allowed us to continue to strengthen our balance sheet. In H1, we added $141 million of net cash, while also returning around $110 million to shareholders during the period. Q2 marked our sixth consecutive quarter of shareholder returns, following the payment of our maiden dividend in Q1 2021. Since then, we've paid $376 million in cumulative shareholder returns.
That's a number that we are very proud of and will keep increasing. On Slide 14, you can see more detail on how we're tracking against our shareholder returns commitment. As you may recall, last year, we outlined a three-year dividend policy to pay a progressive fixed minimum dividend, which increases each year with the aim of distributing a cumulative minimum of just over $500 million by the end of full year 2023. We are tracking well ahead of that target. For 2021, we exceeded our minimum dividend of $125 million, paying $140 million. For H1 this year, we've declared an interim dividend of $100 million.
This is a 43% increase on last year's H1 dividend, and to reinforce our commitment to paying supplemental returns, we've also increased our full year dividend commitment from a minimum of $150 million to at least $200 million. Turning to Slide 15, where we put our half year shareholder returns in context. For H1, the dividend declared and the buybacks conducted total $138 million. This represents about 10% of revenue, 25% of operating cash flow, or nearly 60% of adjusted net income. On an annualized yield basis, it equates to just under 5%, and this is just assuming the minimum annual dividend of $200 million and only the buybacks done in H1.
Perhaps more relevantly, is that it, it equates to nearly $200 return for every ounce of gold produced in H1, which is quite an impressive statistic, I think. Turning to Slide 16, this shows that over the last six quarters, we've already delivered $469 million in total shareholder returns. For context, this is already about 10% of our market cap. In the waterfall chart, you see that if you only factor in the minimum dividend commitment for this year and next, it would represent over $750 million in shareholder returns. This amount could be higher, provided the gold price remains above $1,500 per ounce, and if Endeavour's leverage remains below 0.5 times net debt to Adjusted EBITDA, as stipulated in our dividend policy.
This amount is well above our minimum commitment of $500 million, so we believe it demonstrates the resilience of our business and shows how focused we are on delivering strong shareholder returns. In addition to delivering shareholder returns, given our balance sheet strength and our ongoing strong cash flow generation, we're also well-positioned to fund our growth, and Slide 17 highlights our attractive pipeline of growth projects. As I set out earlier, our priority is the Nogbele-Massawa expansion, where construction commenced in the second quarter of 2022. Progress is on track with the first gold pour from the BIOX plant expected in early 2024. As outlined in the DFS, this expansion will lift the Nogbele-Massawa complex to top-tier status. I'll let Mark provide more information within his section.
Our greenfield development projects are also progressing well, as we continue to refine the Lafigué DFS, which is scheduled for completion in Q3. This would enable us to have a construction-ready project, which could be quickly launched once an investment decision is made. Ahead of that investment decision, in order to not delay the project timetable and de-risk its construction phase, we are conducting minimal infrastructure investments. As such, the mine fence and the airstrip construction are now completed, the access road construction is nearing completion, and the construction camp has been procured. We haven't spent much, in fact, less than $7 million this year for both the DFS and infrastructure work, but these investments will greatly help us in the future. At Kalana, we are advancing some of the desktop work that contributes to the DFS.
While both projects look attractive, Lafigué is a priority because of its production profile, favorable infrastructure and economics, which have the potential to meet our capital allocation criteria. Thanks to the long production visibility we have from our portfolio, we have the flexibility to decide when the optimum time is to launch the project into construction. Turning to Slide 18, you see the continued focus on exploration across our portfolio, with nearly $44 million spent in the first half of 2022. Exploration activities were mainly focused on expanding resources and expanding mineralized trends at existing operations. In addition, given the long mine life visibility on our flagship assets, we are now able to dedicate significant efforts towards greenfield exploration opportunities. Given the success so far, efforts are expected to continue to ramp up in H2 2022.
Later this year, we expect to publish resource updates, and we are pleased to reiterate that we remain on track to achieve our five-year discovery target of 15-20 million ounces of indicated resources at less than $25 per ounce. Next, on page 19, I want to briefly touch on a few of the highlights from our sustainability report that was published in Q2. For me, the key stat is that our 2021 total contribution doubled to reach $2 billion. In doing so, we supported around 1,700 local businesses. This shows that our activities can make an enormous difference to accelerating the economic and social development of the regions in which we operate. That local approach is important to us.
We are one of the largest private employers in the region, and as we take development of our local talent very seriously, I'm pleased that over half of senior operational management team are now nationals, and this is a number we expect to improve on further in the coming years. On the environmental side, we continue to be one of the lowest emitters amongst our peer group, and are busy working on our pathway to a 30% reduction of emissions by 2030, as we have previously outlined. Crucially, we know, we know how vital it is to align all our people with our ESG ambitions. To drive the right actions and outcome, we've increased the weighting of the ESG related components to 30% for the annual bonus and 15% for the long-term incentive plan.
Before turning to the next slide, I just want to flag the pictures on this page. These are just a few examples of ongoing initiatives which we are extremely proud of. To learn more, you can visit our website to read about the various case studies. Investing in Endeavour Mining is basically supporting impactful activities and investments. Continuing on the ESG theme, we were delighted to recently receive a double A rating from MSCI, which marks a significant improvement in our rating over recent years. Is, I believe, a strong reflection of the hard work and progress we are making across the group. It's particularly pleasing as this places us in the top quartile of our peer group.
Before I hand over to Joanna and Mark, as we have just passed the first anniversary of our LSE listing, I thought this would be a good opportunity to recap on the progress we've made. It is good to see the progressive increase in volumes traded on the LSE and its associated exchanges. Following the most recent FTSE 100 inclusion, we are now seeing over 40% of our total liquidity in the U.K. This is also a reflection of the change in our shareholder register, as we continue to attract U.K. and European funds, given our attractive investment proposition. We have also seen a significant portion of our shareholder register migrate their shares from Canada to the U.K. In fact, 33% of our shares outstanding have moved shares over, and we're continuing to see share migrations.
Given this stat, we are very pleased with our LSE listing, the incremental demand it has driven for our shares, and our overall positioning within the U.K. market. I would like to hand things over to Joanna, who will take you through the financial results in detail. Joanna?
Thank you, Sébastien. On Slide 23, we show our financial highlights. Given that we'll go into the details of the table in the upcoming slides, on this slide, I just want to draw your attention to our Adjusted EBITDA margin, which, as you can see, remains extremely high at over 50%. This high margin allows us to generate significant cash flows, protects us against variations in the gold price, and as Sébastien mentioned earlier, gives us the financial flexibility to deliver our capital allocation strategy. Onto Slide 24, coming off a very strong Q1, our quarterly production in Q2 decreased 3%, while All-In Sustaining Costs increased by 13%. This variation was as expected, given the seasonality of our production and the associated mine plans.
Mark will detail this in the next section, at a high level, in Q2, we had lower production at some of our mines due to the preparation ahead of the rainy season. In some cases, we focused more on waste stripping activities, which resulted in lower grade ore mined, while in other cases, we mined more fresh ore from deeper levels in the pits, again, in preparation for the rainy season. On the cost side, we did experience some inflationary pressures, but as I will detail on the next page, these variations were not the key driver for our cost increases. These efforts and the strong H1 performance mean that production and All-In Sustaining Costs remain on track for our full year guidance.
Moving to the next slide, we see in more detail the breakdown of our All-In Sustaining Costs for the quarter, which increased by $106 to $954 per ounce. Over 90% of that increase was the result of operational factors during the quarter. As I mentioned on the previous slide, we were focused on waste stripping ahead of the wet season at Nogbele, Massawa, Boungou, and Wahgnion, which led to lower gold sales and higher operating and sustaining capital costs, resulting in a $38 and a $61 per ounce increase in All-In Sustaining Costs, respectively. Market factors also played a part, with increased fuel and explosive costs, which we highlighted in Q1, contributing to an additional $52 per ounce to the All-In Sustaining Costs.
This was offset by favorable foreign exchange rates as the euro continued to depreciate against the US dollar, and by reduced royalty rates as the gold price decreased during the quarter. You will remember in Q1 this year that we presented our cost breakdown, where we see inflationary pressures and how we are mitigating them, which we have reiterated on slide 26. I will not walk you through the whole slide again. I just wanted to focus on the key inputs. Salaries make up approximately 17% of our all-in costs and are locked in for 3 years, giving us stability and visibility on salary inflation. Fuel makes up approximately 16% of our all-in cost base. As you can see, since Q4 last year, average Brent prices have increased by 46%.
While in-country pricing in Cote d'Ivoire has remained flat, in Burkina Faso, LFO and HFO increases are 35% and 25% respectively, and in Senegal, HFO prices have increased by 38%. In-country pricing continues to be partially shielded by governments, as pricing is revised only periodically. This means that the price impact of Brent Crude volatility is generally delayed and often not fully felt in country, and we are shielded from paying peak spot international prices. In addition, the fuel price increases detailed above have been largely offset by favorable FX movements, as the euro has decreased 7% compared to the US dollar in the first half of 2022. Given that approximately 65% of the operating cost base is in local currency, which is linked to the euro, this is significant mitigant to our higher costs.
Touching upon our consumables, given renegotiated key contracts across the group last year to leverage our larger size, we are currently well positioned with favorable terms. As we highlighted in Q1, the only area we are realizing any material cost increases is on explosives, explosives, where prices have increased by around 70% since Q1, resulting in approximately $13 per ounce increase in our All-In Sustaining Costs, which is in line with the $10 per ounce we flagged in our Q1 results, is not significant to our overall cost structure. Moving to Slide 27, you can see a breakdown of our operating cash flows, which shows a quarter-on-quarter decrease.
Our quarterly operating cash flow before working capital decreased by $31 million to $253 million in the second quarter, due to the lower realized gold prices and slightly lower production, as well as the higher costs, all of which impacted our operating cash flows. The realized gold price from continuing operations decreased by $79 per ounce, from $1,911 per ounce in Q1 to $1,832 per ounce in Q2, while at the same time, the amount of gold sold decreased by 26,000 ounces, resulting in an 11% decrease in operating cash flows. On slide 28, you can see an operating cash flow bridge. We typically pay increased income taxes in Q2, related to the final tax payments for the previous financial year upon filing of our tax returns in the second quarter.
As previously mentioned, our operating cash flows were impacted by higher operating expenses and the decrease in gold production and the gold price. The changes in working capital were negligible in the second quarter compared to an outflow in the prior quarter, primarily due to the increase in stockpiles and decrease in payables in Q1. On an overall basis, the operating cash flows decreased by $51 million during the quarter. Moving to Slide 29, I wanted to highlight how our net cash position has improved quarter on quarter. As mentioned, we generated $253 million of operating cash flows and invested $145 million in our operations and growth projects during the quarter. We also incurred $26 million in financing activities, which was largely associated with the shareholder returns in the form of share buybacks paid during the quarter.
The value of our cash on hand was impacted by the declining euro to US dollar exchange rate. We ended the quarter with a net cash position of $217 million, well on our way to our $250 million targeted net cash position. At the end of the quarter, our liquidity remains strong, and we have $450 million undrawn on our RCF. Turning to Slide 30, we have a detailed breakdown of our net earnings. I won't go through every line item here, but I wanted to address a few of the more significant items. Corporate costs decreased during the quarter, primarily due to lower costs associated with employee and professional services, as employee bonuses were paid in the prior quarter.
The gain on financial instruments was $107 million in the second quarter of 2022, mainly due to an unrealized gain on our gold forward sales and gold collars, as well as an unrealized gain on the revaluation of the conversion option on our convertible notes, offsetting much of the unrealized losses that were recognized in Q1 2022 on these same items as the gold prices decreased. The gains in Q2 were partially offset by foreign exchange loss of $39 million, which increased from the $20 million recognized in Q1. The majority of the above gains are unrealized, and the realized gain in Q2 of this year related to our forward contracts was only $1.4 million.
Adjusted net earnings were slightly lower than the prior quarter due to lower earnings from the mine operations, which were offset by higher gains on the financial instruments and lower income tax expense. In summary, you can see that our financial performance is strong, and we are well positioned to continue funding our shareholder returns program and internal growth pipeline, while continuing to build our net cash position. This concludes my section, and I will now hand it over to Mark to walk you through the operational performance. Mark?
Thank you, Joanna, and hello to everyone on the call. Over the last two weeks, I've been in West Africa, visiting our mines and projects, and I am pleased to report that the operations are performing well and projects are advancing on schedule. Our safety performance has been very encouraging for the first six months of the year, with just a single lost time injury. We actively encourage and track leading safety indicators, such as management walkarounds, task observations, and job hazard analysis. In addition, we ensure that all of our contractors adopt the same general approach to managing safety, too. As Sébastien and Joanna mentioned, our operational performance continues to be strong and reflects the benefit of having a diversified portfolio. The group is well positioned to meet full year guidance. On Slide 32, we have provided a breakdown of performance by asset.
As you can see, our strong group production is driven by outperformances at our Houndé, Ity, and Mana mines. From a production cost perspective, we are pleased to see that for the first half of the year, Nogbele-Massawa, Houndé, Ity, and Mana are all well below their guided ranges, leaving them well positioned to achieve guidance. I'll now move on to the performance of each asset, starting with Nogbele-Massawa on Slide 33. At Nogbele-Massawa, we are transforming the mine from a CIL-only operation, processing non-refractory ore, to a combined CIL and BIOX operation, with the ability to process high-grade refractory and non-refractory ores through two adjacent circuits. During the quarter, mining capacity shifted from the largely developed Sofia North pit to enable increased mining rates at the Nogbele and Massawa central zone pits. In addition, we commenced mining at the Massawa North Zone pit, which was predominantly waste stripping.
As a result of these stripping activities, all mining was focused on lower-grade areas of the Massawa central zone pit, as well as the Sofia North pit, which resulted in lower production this quarter compared to Q1. Similarly, All-In Sustaining Costs increased in Q2, largely due to the lower volumes of gold sold and the expected increase in fuel costs. Nogbele-Massawa is on track to achieve its full-year production and cost guidance. Most notably, in the second half, grades are expected to increase given the access to the higher-grade areas of the Massawa central zone and North Zone pits. Moving to Slide 34, you can see an overview of our Nogbele-Massawa expansion project, where we are constructing a 1.2 million ton per year BIOX plant, adjacent to the existing CIL.
This will allow us to process the high-grade refractory ore from the Massawa deposits, which currently contain more than 1.3 million ounces of reserves, that have significant potential to increase. We are happy to report that the expansion project is on track, and activities are ramping up. We have finalized the EPCM contract, the powerhouse contract, and the civils contract, which was awarded to a Senegalese contractor. We have started to order long-lead items, including the crusher and mills. Detailed engineering and design is progressing well, and on the ground, roads have been realigned, and earthworks to prepare the full processing plant area are well underway. Regarding the capital spent to date, approximately 37% of the $290 million project CapEx has been committed, with $24 million spent.
We are very pleased that the capital that has been committed so far is in line with our expectations, and we are tracking on budget and on time. This has been the advantage of spending significant time on the DFS to ensure that we have properly scoped and priced the work, and then launched the project and started to award major contracts and work packages before the numbers become out of date. Moving to Slide 35, you can see that the Houndé mine had a very strong quarter. Houndé continues to benefit from the high-grade ore source from Kari Pump, which is now being supplemented by ore from the Vindaloo Main and Kari West.
All-In Sustaining Costs increased slightly during the quarter, while staying below the lower end of guided range, primarily due to higher mining and processing unit costs as a result of the expected increase in price for fuel and explosives, which were partly offset by the higher gold sales for the period. Through the remainder of the year, we will focus on Kari West and Vindaloo Main for the majority of the ore feed as we continue the next stage of stripping at Kari Pump. We expect grade and recoveries to decrease in the second half as a result, and costs to increase slightly. The strong first half of the year has positioned Houndé very well. We expect production to continue to trend above the full-year guided range, and All-In Sustaining Costs to achieve the full-year guidance. Turning now to Ity on Slide 36.
We are very happy with the performance of Ity, with another very strong quarter of production due to higher recoveries and higher grades milled, following the completion of mining in the current phase of the Daapleu pit, which had lower associated recoveries. We expect to maintain these high recovery rates as all mining will focus on the Le Plaque, Ity, Bakatouo, and Walter pits in the second half, where we expect to mine a higher proportion of oxide ore. All-In Sustaining Costs increased in Q2, primarily due to higher sustaining capital and higher mining and processing unit costs, resulting from the expected price increases in fuel and explosives. Following the strong start to the year, Ity is on track to produce near the top end of its guided range at an All-In Sustaining Cost within the guided range. Turning now to Slide 37 and the Boungou mine.
Our focus continues to be on waste stripping in the West pit. As a result, during the second quarter, ore was mined from the lower-grade East pit, which resulted in lower production and higher production costs. After pre-stripping is completed in the West pit, we'll be able to start mining higher-grade ore in the second half of the year, which will be blended with lower-grade stockpiles. We currently expect full-year production to be near the lower end of the guided range, while All-In Sustaining Costs are expected to be within the guided range. Moving on to slide 38 for Wahgnion. Here, we are focused on expanding the footprints of the existing deposits and adding new satellite deposits, such as Samavogo, to increase mining optionality and provide additional high-grade ore sources.
This will allow us to continue to process ore well above nameplate capacity and introduce higher-grade ore into the feed to increase production later in the year. During the quarter, production at Wendyam decreased, primarily due to the lower average grade milled, as mining was increasingly focused in the Nogbele North pits, as activity at the Fourkoura pit started to wind down. All-In Sustaining Costs increased, as lower-grade ore was mined and processed due to the sequencing of mining activities at the Nogbele North and Nogbele South pits. As expected, we saw an increase in mining and processing costs due to a combination of higher fuel costs and increased electrical consumption, as the proportion of fresh ore in the mill feed increased.
In the second half of the year, we will start mining from Samavogo, which will introduce a higher grade source of oxide ore great source of oxide ore into the feed. This satellite pit requires the construction of a 20-kilometer haul road and village relocation, both of which are progressing well. In the short term, ore will continue to be sourced from the Nogbele North, Nogbele South, and Fourkoura pits. Wahgnion is expected to continue to trend below its full-year production guidance and above its cost guidance, with grades and costs expected to improve significantly with the introduction of some of our goods. Moving now to Mana, on slide 39. During the quarter, mining of the Wona open pit was completed. We're now preparing the haul road to the Maoula satellite pit and conducting advanced grade control drilling to enable mining to commence later this year.
Stope production in the Siou underground continued to perform consistently and comprised a combination of primary stopes, which are filled with a cemented rock fill and secondary. In the short term, ore will continue to be sourced from the Nogbele North, Nogbele South, and Fourkoura pits. Wahgnion is expected to continue to trend below its full-year production guidance and above its cost guidance, with grades and costs expected to improve significantly with the introduction of some of our goods. Moving now to Mana, on slide 39. During the quarter, mining of the Wona open pit was completed. We're now preparing the haul road to the Maoula satellite pit and conducting advanced grade control drilling to enable mining to commence later this year.
Stope production in the Siou underground continued to perform consistently and comprised a combination of primary stopes, which are filled with a cemented rock fill, and secondary stope extraction between the primary stopes. At the same time, we've been progressing the two underground declines at Wona, with over 1,500 meters of combined advance achieved during the quarter. Production for Q2 was consistent with the previous quarter, as lower grades from the Wona open pit were offset by higher plant throughput. All-In Sustaining Costs improved, largely due to the lower strip ratio from the final benches in the Wona open pit, as well as slightly lower sustaining capital. Mana has made a strong start to the year and looks set to produce near the top end of the guided range for the full year at an All-In Sustaining Costs within the guided range.
As you can see, performance across our operations has been strong in Q2 and in the first half of the year. We remain on track to achieve our full-year guidance. That completes my brief overview of the mine. I'd be happy to go into more detail during the Q&A session. Sébastien, back to you.
Thank you, Mark and Joanna. As you can see, we've made good progress during the first half of the year, and we are well positioned for the rest of 2022. Beyond this, we believe that our progress are across our key teams will continue to build the resilience of our business. To conclude, I'd like to leave you with the three key numbers, which are presented on the right-hand side of the page. These summarize our business model and how we generate value to shareholders. In summary, we discover ounces for $25 an ounce. We produce them for less than 900 per ounce, and then we have returned nearly $200 per ounce to shareholders. Our ability to continue to do this over and over again is supported by a track record of replacing our depletion through exploration.
By delivering our growth and production according to plan, where we are on track to meet guidance for the 10th year in a row. As always, I'd like to thank my team for their tremendous work and dedication. We are fortunate to have fantastic people within the organization that are pushing every day to make sure we hit or exceed our targets. You can't imagine how lucky I am to lead this incredible team and supported by an amazing board. With that, I'd like to thank you all for dialing in and open the line up to questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, you will need to slowly press star one and then one on your telephone and wait for your name to be announced. We will be prioritizing questions from covering analysts at this time. Once again, please press star one and then one if you wish to ask a question. Please stand by while we compile the Q&A queue. We have our first questions come from the line of Fahad Tariq from Credit Suisse. Please ask your question.
Hi, good morning. Thanks for taking my question. The Lafigué Lafigué DFS, I noticed the timeline changed a little bit by a quarter. In the press release, you mentioned that it's continuing to be refined. Can you just provide some more details on, you know, what is the current status of the DFS, if anything is changing? Also, if you could provide an update on whether you still have the view that, you know, if costs remain high, that you could potentially defer or delay the project. Thanks.
Sure. Thanks, Fahad. Yes, I mean, on, on the Lafigué, we're still convinced that this is a very attractive project for Endeavour, and that will fit well in our portfolio. As, as I mentioned, beginning of the year, given the inflationary environment, we've been taking more time to reassess the DFS and optimize cost. What we want is to make sure that when we come out with a CapEx figure, this is the CapEx that everyone can trust, and therefore we continue to work on this.
I had mentioned in the presentation, in parallel, we are working already on the ground on some of the minimal but important and key construction elements, such as the fencing, the airstrip, the road access, in order to continue to target production in second half, end of first half of 2024. We keep, you know, this in mind. The objective will be to publish in the Q3, into Q3. Yeah, we are, I would say, weeks away to come out with this with the DFS, and that will be a robust, again, DFS.
I think that, with some background on the Nogbele Massawa expansion, we'll be able to illustrate that, we have strong confidence on the CapEx number that, will come out from the DFS.
Okay, great. That, that's very helpful. Then maybe just one more on capital allocation. I, I noticed the pace of buybacks, decreased from Q1 to Q2. I'm just curious, and, and maybe you can remind us, how do you think about buybacks versus dividends? I was a little surprised that there weren't more buybacks done in the second quarter, given the share price was lower. Any thought there would be really helpful. Thank you.
Sure. We have, you know, we mentioned that in 2021 and up to Q1 2022, the preference was going to buybacks, in particular, in the midst of the changes with the listing in London. I think it helped and supported it. We believe that we will continue going forward with a combination of, you know, more dividends and more buybacks. I think that it's more a timing issue, and you should see more buybacks in H2.
That's very clear. Thank, thank you very much.
We are going to take our next question. Our next question has come from the line of Amos Fletcher from Barclays. Please ask your question.
Yeah, good afternoon, everyone. just one question on, on All-In Sustaining Costs in the 2Q, we were running above the top end of the guidance range, so obviously, I, I guess you're expecting an improvement in the 2H. Could you just walk us through what are the main drivers of that? Thanks.
Sure. Hi, Amos. We usually have in Q2 and Q3, lower production numbers and higher all-in spending costs simply because of the rainy season. We usually have strong Q1 and strong Q4. I think that, you know, it's fair to say that we should see, you know, Q3, you know, more in line with Q2, and Q4 more in line with Q1. That's why, you know, overall, you know, we're confident that by the end of the year, we'll meet the initial guidance that we gave at the beginning of the year.
Okay, great. Thank you.
We are going to proceed with the next question. The next questions come from the line of Alain Gabriel from Morgan Stanley. Please ask your question.
Yes, good afternoon, gentlemen. I have two questions. Firstly, Sébastien, you have been very active in managing your, up your portfolio quality via acquisitions and disposals. Do you think that your portfolio today is fully optimized? If not, which assets are drifting away from your quality framework or quality criteria? That's my first question.
Sure. Thanks, Alain Gabriel. You know, I think we, you know, since 2016, we've always been managing carefully our portfolio. We do it by improving progressively the quality. There are a lot of exploration going on in some of the existing assets to continue to improve mine life, improve costs, but at the same time, we like the pipeline growth that we have with the Nogbele Massawa expansion. Probably noted that, you know, Nogbele Massawa is by far, I mean, the lowest production site, production cost site. So the expansion will continue to drive All-In Sustaining Costs, you know, down. We believe that projects such as Lafigué, which will have All-In Sustaining Costs below $900, will will also drive in the right direction, the portfolio.
We're not shy, I mean, in taking out from the portfolio, assets which are underperforming or which are not meeting the targets that that we want. We're currently, you know, happy with the portfolio. Obviously, Wahgnion and Boungou are challenging assets, you know, currently. You know, we see some opportunities, in particular at Wahgnion, starting from next year. Boungou, it's more because of the current environment, some of the logistic issues and inability to do as much exploration as we wanted. Overall, we know we are pretty, pretty confident on the on the portfolio.
Mana has been, you know, doing extremely well with this, you know, turnaround, moving out from Wona open pit and getting into the underground, that will provide, I mean, strong feed, I mean, to the plant and allow us in parallel to do further exploration. Obviously, I'm just, you know, emotionally attached to Houndé and Ity, which are original assets, you know, from the beginning. And wouldn't be surprised if, you know, those two assets, you know, might get close to 300,000 ounces of, you know, production this year, each of them, which is, you know, a significant recognition to what the team has been doing since in improving the quality of those assets since the beginning.
Thank you. My second question is on working capital. Clearly, you managed to avoid building up any working capital during the first half, in spite of the raw material prices having risen sharply during that period, and this is in contrast to almost every other mining company. Can you elaborate on how you managed to keep working capital creep at bay, and how should we think about your working capital movements as we go into the second half? Thank you.
Sure. Well, the, the working cap, I mean, is really, a, a direct translation of, of our mining activities, but also, you know, seasonality. We're trying, I mean, to put as much pressure as we can on the team also in, in reducing, inventories. We've got more and more, control, I would say, on the, on the, on the stocks inventories, with, more work done with our suppliers, in order to move progressively, to, stock consignment, with a lot of them. This helps us to, I think, to better control over time, our working capital.
Thank you. How do you expect them to evolve in the second half?
Joanna, you wanna comment on working capital evolution?
We expect changes in the working capital to be negligible for the next quarter. Any increases that we're seeing in inventories are largely being offset by reductions in our prepaids and our other payables, so we don't expect there to be significant changes quarter on quarter for the rest of the year.
Thank you.
We are going to proceed with the next question. Our next question comes from the line of Anita Soni from CIBC World Markets. Please go ahead. Your line is open.
Good morning, everyone. Thank you for taking my call. Sébastien, could you talk about the implications of both Mana and Boungou going into 2023? Is there, you know, is there long-term sort of implications of the challenges that they've been having this quarter, or do you expect them to reverse for 2023?
Sure. Thanks, Anita. I think for Mana-
Sorry, I think I, I misspoke there. I meant Wahgnion and Boungou, not, not Mana.
Yeah.
Oh, okay.
Okay. Mark, I mean, you wanna, wanna comment, Mark?
For, for Wahgnion, for 2023, we'll be winding up the mining activity at Fourkoura this year, and we'll be opening up the mining at Samavogo, which is a, a higher grade, ore source. We are expecting to see, some higher, processing grades next year.
For Boungou?
For, for Boungou, I mean, look, really it is just going to be a, a continuation of, of, of how we're going there as we continue, just balancing the, the stripping and opening up of the, the, the stages of the pits between the east and the west.
Okay, thanks. I guess with Boungou, I was just wondering, you've mentioned that, you know, you haven't been able to do exploration there, so is there sufficient sufficient ore grades going into the sort of medium term and the long term, as you look out at the, the profile for Boungou?
I mean, look, the, the good thing is we've still got some headroom in terms of reserves. What we're doing is we're focusing on everything around the, the pit and within the, the fenced perimeter, just to ensure that we fully understand everything there and have eked out all possibilities. There, then there has been some just small advancements, just immediately to the north. But, you know, as, as I said, at this point in time, we've still got a, a number of years of reserves ahead of us.
Then flipping that around, could you maybe talk about Ity and Houndé, and Mana, they're gonna hit the top end of their guidance range. Is there anything that we could maybe crack into 2023? Are you seeing positive grade reconciliation, or is it all just as expected?
No. I mean, look, I think, Ity and Houndé and Mana have all had exceptional years this year. Mana did have a nice combination of the Wona open pit and the Siou underground. Going forward, we will have a, a lower grade satellite pit called Maoula, that will be opening up. Then we'll also be opening up the Wona underground. For Ity and Houndé, you know, w-we're not from a, from a, 2023 perspective, it will be similar probably to the guidance of this year. We're still working through our updated life of mine plans, you know, the reserves and planning and everything. The Ity and Houndé...
Okay.
As Sébastien said, you know, they've been great assets for us that we've had for a while, and we're very, very comfortable with how they're performing.
Okay. Then lastly, if I could ask, since you mentioned reserve updates, do you plan on using the same gold price that you used previously, and can you remind me what that is, or are you gonna change your gold price?
We're gonna use the same gold price as previously, which is $1,300 per ounce.
Okay. Thank you very much.
We are going to proceed with the next question. Our next question comes from the line of Ovais Habib from Scotiabank. Please ask your question. Your line is open.
Thanks, operator. Hi, Sébastien and Endeavour team. Really congrats on a strong quarter and first half. Great to see production, especially cost guidance maintained. Sébastien, most of my questions that I-
I was looking to ask have been answered, but maybe a follow-up question on Lafigué. You kind of mentioned, you know, obviously the feasibility study coming in the end of Q3. You know, you're, you're really trying to tighten up, you know, the CapEx assumptions. Maybe any sort of, you know, comments that you can make on... Maybe, Mark, you can jump in here as well, in terms of, you know, the scope, any sort of scope changes or mine life, extensions that you're kind of, you know, thinking of within this feasibility study, that you can point towards? Thanks.
Sure. Thanks, thanks, Ovais. You know, I think that, what's important for for us on, on, on, on Lafigué is, you know, the quality, of the project, and the ability to control the CapEx. This is why, you know, we're spending, we're spending time. In terms of scope, we mentioned that, we've increased the plan from 3 to 4 million ton, which is obviously an important step and, and explain, you know, part of the delays compared to the initial plan. The second part was in the current, inflationary pressure. We've been, taking our time to see where prices stabilize, and, we're seeking, to select all the right suppliers ourselves to negotiate best, you know, the prices.
We moved from, you know, an EPC contract to an EPCM contract to be able to build ourselves, you know, much more. I think I gave you, you know, some examples. You know, we had in our initially, initial CapEx, camp construction for about $15 million. You know, our guys have been able to identify a camp that was due for Rio Tinto, for Guinea, that was there, well, it was in the port in Turkey, that we were able to take up, you know, for $6 million. You see that, you know, when you're able to spend more time focused, you're able to significantly improve things, which is even more critical in this inflationary environment.
The reason why we're not rushing is because we wanna make sure that at the end, you know, the CapEx we're gonna come up with, you know, meets the overall returns that we have on this project, which is 20% return on capital employed, and at the same time, that we have enough confidence and room in this CapEx, that there won't be any surprise going forward. I think that, you know, we might be able, in Q3, to demonstrate that, if we take the first projects we launched, about now 3 months ago, which is the Nogbele-Massawa expansion, that, you know, this CapEx is, is going well on track compared to what we announced.
Therefore, you know, feel comfortable that, the number we will put out, you know, for, for Lafigué, is, is one that, that we'll stand behind.
Okay.
In terms of-
Thanks, thanks for that question.
Yeah, the thing I would add, Ovais, is, you know, Lafigué is important also for us, as we want to continue to ensure that we have a diversified portfolio across the region. You'll recall that we probably have a bit more than 50% of our production, you know, coming from Burkina today. Tomorrow, with the Nogbele-Massawa expansion, you know, going to about 400,000 ounces, if you take, you know, 1.4-1.5 million ounce annual production, means that Senegal will be close to about a third of our production once the expansion is done. With Lafigué, that would be doing between 200,000-250,000 ounces alongside Ity, which is about, again, 250,000 ounces.
That means that Cote d'Ivoire, you know, will be, you know, around half a million ounces also. So that's another third, and therefore, have an evenly spread production portfolio between Senegal, Cote d'Ivoire and Burkina Faso.
Excellent, thanks. I really appreciate the insight there, Sébastien. Just, you know, on the exploration side then, you know, obviously Lafigué was completely a greenfields discovery from Endeavour. Is there other Lafigué kind of in your back pocket that you can start talking about?
I'm, I'm not gonna give the mic to Patrick, who could spend hours on, on the back pocket options that we are building and preparing. I think, you know, that's the beauty of this region. You'll recall that, you know, from a discovery standpoint, it's the biggest region for the last 10 years for discoveries. We've got 1, 2, I would say, very promising greenfield exploration in Guinea and Cote d'Ivoire. I think we will be making some announcements in Q3, beginning of Q4, around, you know, the results that we have on, on some of them.
Yeah, some of them are quite spectacular and very promising to continue to fuel, I would say, our organic growth pipeline.
Okay. Thanks, thanks for that, Sébastien.
Just doing a bit of teasing. Thanks, Ovais.
Thank you.
We are going to proceed with the next question. Our next question comes from the line of Wayne Lam from RBC. Please ask your question. Your line is open.
Hey, thanks. Morning, guys. Just a question at Massawa. I was just wondering, as you move into the central and the north zones, can you give us an idea of how the grades will trend there relative to Sofia? When do you expect to get into the transition material from those deposits, and what kind of impact on the recoveries do you expect once you get into those zones?
Yeah, okay, thanks for that. The Massawa North Zone pit is a higher grade pit than Sofia. Central zone in the, in the oxides is, is kind of similar. In terms of the weathering surfaces, they are variable, so you do start to see some transitional in parts of the pit earlier than others. It's not like it's just a, a uniform line that you get to and, and you transition between the, the, the phases. We are starting to see some transitional indication in the, in the central zone pit that we've been mining since the start of the year. What we're doing is we're not processing any of the transitional ore. That's all being stockpiled for the BIOX.
Okay, perfect. Thanks. Then maybe just on fuel, I think the detail that you guys provided was really helpful. Would you be able to help quantify the impact of the government subsidies in the various regions? All else equal, should we expect cost to trend higher, as, as prices start to reset?
Sure. With Martino, we can probably take this offline with you and, and, and, and go through it. As you probably saw, I mean, it's probably about, you know, close to $50 an ounce in terms of impact, you know, for H1 based on the current fuel prices of the different countries. There is no real, I mean, subsidies, I mean, direct subsidies, you know, for for the industry. It's just the timing. The sense we have is that we probably reached a peak in terms of fuel prices in the different countries where we are, and therefore, are confident that our forecast, I mean, for for H2, is is under control.
Okay. Got it. Thank you. And maybe just the last one at Mana. Just curious how much more open pit material you expect to be able to supplement the underground on a go-forward basis? I know post-depletion of the Wona open pit, there are a couple of smaller satellites, but just based on the outlook today, what proportion of ore can we anticipate kind of adding to the underground profile?
For, for the open pit, the immediate deposit is Maoula. We do have some other options that are, I guess, just slightly lower quality than Maoula and slightly further away that we're still investigating. From a, an underground perspective, the Wona underground, the strike length there is quite long, and we've started with two portals, and, and that gives us the ability to mine in the order of, basically 60,000 tons a month, per portal. We're considering the ability to then go further along strike to then start to duplicate that.
Okay. From the open pits, specifically, like, how much should we model in terms of tonnage?
Are you talking about over the, over the course of the year, or?
Yeah, sure. Over the next, call it, 12 months.
Yeah. I, I don't have the exact numbers in front of me, but I think we are looking at, you know, Clearly, the goal will be to fill the mill, if possible. One of the other things that is always something that we will balance is looking at the quality of the, of the ore coming from underground, is whether we do, slow down the, the mill in future years. There is certainly nothing wrong with that, and I've certainly done that before in my career, where if you have a higher quality of feed from underground, the goal is not necessarily to fill the mill. In the short term, we believe we will have enough feed for, certainly 2022, 2023.
Okay, got it. Thank you.
We are going to proceed with the next question. The next question comes from the line of Don DeMarco from NBC. Please ask your question. Your line is open.
Thank you, operator, good morning, team. Hi, Sébastien. Yeah, well, what did we see here is very strong, consistent operations quarter-over-quarter. It's good to see. Maybe one little blemish in Q2 at Wahgnion. Can you maybe add a little bit more color on Wahgnion then? Like, what's different through the execution in H1 versus what your expectations were at the time of guidance? What's the grade of the Nogbele pit, and how much ore would you be expecting to mine from that, say, in Q4 and into 2023?
Yeah. So essentially, what we do in the different mining areas, Nogbele North, Nogbele South, Fourkoura, is we always start mining the higher value pits first, and then we progress into the lower value pits. You know, we were just in a, in a situation where we're, we're running multiple lower value pits whilst we're establishing, in particular, the Nogbele area. So we are definitely on track to be mining at, at Nogbele in Q4. In terms of the specifics of the detail, I don't have that, and I'm sure that that's something that Martino and team can take you through.
Yeah. Nogbele is a bit more than 2 grams per ton in terms of upgrade. It's a bit higher than what we currently have, and this is why we're confident that we should see, you know, higher production numbers, and therefore, lower All-In Sustaining Costs going forward at Wahgnion.
Okay. Okay, great. maybe another continuation of a previous question. you've got a couple of up and coming resources in your pipeline, Bantou, Karankasso , Golden Hill. Is there any timing on a technical report on any of these? I know some of these are actually pretty substantial in terms of the, the magnitude of ounces.
No, I think that, you know, Bantou is expected to be drilled in H2. I mean, we started, I mean, at the end of Q2, to do some drilling there. We start getting some results around that in H2. Same for Golden Hill, which obviously was not a priority in the short term, given some very good results that we had around Wahgnion. As you know, Golden Hill, we still view Golden Hill as a potential satellite pit for Wahgnion. It just goes through, you know, the highest priorities, and move forward progressively.
There has been also some very interesting discoveries recently in Q2, that we've decided to shift, I would say, the some of the drilling programs to those highly new, attractive areas, in particular in Côte d'Ivoire. This is why, I mean, it's changing a bit, some of the work plans, but, you know, the good thing is to have, you know, so many, so many options in the portfolio. In any case, we intend to do a full update on the on the exploration as part of our Q3 results in November.
Okay, great. Okay, we'll look forward to that. I think that's all for me for now. Thank you very much.
Thanks. Thank you.
We are going to proceed with the next question. Our next question has come from the line of Carey MacRury, from Canaccord Genuity. Please ask your question. Your line is open.
Hi, good morning. Most of my questions have been answered. Maybe just on the production guidance. You know, with H1 performance, you're tracking to the high end of the guidance range. Is that more or less what we should be expecting for the year now? Or should we be expecting a bit of a slowdown at, at some of the assets?
You know, we, we are always cautious, Carey, simply because, we are into now the rainy season. We don't know what's gonna be the magnitude of the impact of the rainy season and, up to, which date. I mean, we'll have some, some impact. Obviously, we are preparing ourselves, by stockpiling, in, in H1, in particular in Q1 and in Q2. You know, so far so good, and this is why we felt, you know, confident to reiterate, current, guidance, both on production and cost, because we see that, that we're trending well, and, and that the plan is, is, is working as, as anticipated.
Okay, fair enough. Maybe similarly on the AISC guidance, a lot of your peers have, you know, at least indicated they expect cost to come at the high end of guidance. You're tracking right in the middle. I know there was a lot of pluses, pluses and minuses over the last quarter, but is, is still the middle of guidance still a reasonable place to target? You know, obviously barring changes on the rainy season.
Sure. Well, you know, we, we would like, I mean, the entire sector being performing well, so that, you know, it attracts overall investors rather than being just an outlier. At the same time, you know, I keep, keep feeling that, you know, when you've got strong inflationary pressure, you still have leverages, I mean, to compensate some of them. Probably the worst thing to hear, you know, from your ops guys is, it is what it is. You know, it's not, it is what it is. That's what we work on. It's not because you've got a $50 impact on your fuel cost, that you can't improve things elsewhere. You can reduce G&A, you can do improvements here and there.
You have continuous improvements, so you always have leverage. It's just a question of, are you putting the right efforts at the right place to ensure that you are able to compensate for that?
Great. Thanks, Sébastien.
We are going to proceed to the next question. Our next question comes from the line of Raj Ray from BMO Capital Markets. Please ask your question. Your line is open.
Thank you, Operator. Good afternoon, Sébastien and the team. My first question is more general in terms of the one thing we are continuing to hear from the mining sector is skilled labor shortage, high attrition levels and related inflation. Now, being in West Africa, I'm guessing you are shielded from a lot of that, compared to other assets in Australia, Latin America. Just wanted to get a sense of, how you see that in West Africa. Are you seeing some of the same pressures? It's, it's you're, you're shielded against most of that. My second question is on the converts. They mature next year, now there's an option of, either paying it cash or, or taking delivery of shares.
Now, I just wanted to get a reminder, if you can, whether the option is on the company's behest or the convert holders, whether they take cash or shares?
Sure. Thanks, Raj. good to speak. I mean, on, on, on the people side, you know, I think that the, that's the beauty of, of being in, in West Africa, and that's why we like this region. we've been, you know, working for years and years, as you know, on, our program of growing local talents. we have, in fact, to a significant pool of, of people attracted, I mean, to move, into the mining sector. They don't necessarily have, you know, the same background and experience than, you know, in other regions, but they are willing, to learn. and, and we've been seeing, some amazing success story internally, on, on growing, local talents.
Yes, I think that, you know, we have that flexibility, given the region where we, where we operate, and that has been, you know, a success, you know, so far. On the, on the other side, on, on the convert, yes, I mean, we always said that, the objective, given, the cash flow generation that we have, and, in particular in the current gold price environment, is to, to settle, the convert into, into cash, if need be, a mix of cash and shares. The time, for the time being, clearly the, the target is to, to settle in cash, and we're getting prepared.
I mean, this is why you're seeing a significant amount of cash on the balance sheet, in order to be to be prepared for this in March, in March next year. Through this, you know, avoid any dilution to our existing shareholders and demonstrate through that again, that we were right when we did the convert back, you know, a few years ago, and being able to finance our key projects with, you know, a 3% coupon, which if we had gone, you know, through other instruments, you know, the debt level and the and the interest rate, you know, would have been, you know, closer to 7% or 8%.
That's great, Sébastien, thanks for that. Again, good to see the operational momentum continue. Keep up the good work. Thank you.
We will now proceed with the next question. Our next question comes from the line of Homai Puri from Bank of America. Please go ahead, your line is open.
Hi, thank you for taking my question. I just had a question on your 2023 dividend. You increased your minimum dividend this year, but does the 2023 dividend still stand at $125 million? Would you revisit that at some point? What's the thinking of... What sort of would drive that? Thank you.
Sure. Well, we, we said that what we wanted is to have, a progressive, dividend that will continue to increase. I think that, you know, we said that next year, the minimum would be at $175 million, providing.
That will conclude today's conference.
Given that, this year, we should reach a minimum of $200 million, obviously, we should expect, you know, a, a, a dividend in 2023 that should be in line with this or, or higher. Again, this will depend on where gold price is and, and the performance.
Great, thank you.
Thank you. We will conclude today's question and answer session. I would now like to turn the call back to Martino De Ciccio for any closing remarks.
Thank you, everyone, for joining the call today. I realize that there are still pending questions, so we remain available to answer these offline. Thank you, and have a good day.