Good morning. My name is Ursula, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ken Ross Gold Corporation 4th Quarter and Year End 2019 Results Conference Call and Webcast. All participants are in listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. At this time, I'd like to turn the call over to Mr. Tom Elliott, Senior Vice President, Investor Relations and Corporate Development. Mr. Elliott, you may begin your conference.
Thank you.
Good morning.
With us today, we have all four members of the Kinross senior leadership team, Paul Rollinson, Andrea Freeborough, Paul Tomory and Jeff Gold. Before we begin, I'd like to bring to your attention the fact that we will be making forward looking statements during this presentation For a complete discussion of the risks, uncertainties and assumptions, which may lead to actual results and performance being different from estimates contained in our forward looking information, please refer to Page 2 of this presentation, our 2 news releases dated February 12, 2020. The MD and A for the period ended December 31, 2019 and our most recently filed AIF, all of which are available on our website. I'll now turn the call over to Paul.
Thanks, Tom, and thanks everyone for joining us today. This morning, I'll briefly recap some 2019 highlights before I discuss our outlook for 2020 and then I'll turn it over to Andrea and Paul for more details. As we reported yesterday, 2019 was an excellent year for Kinross and we had a strong finish in the quarter. Production was higher and unit costs were lower year over year. We generated robust cash flow and increased liquidity.
Internally, we strengthened our portfolio and future production profile while adding life at our existing mines. Externally, we continue to generate value through our disciplined approach to corporate development and we maintained our strong performance in ESG. We take pride in our track record as dependable operators and 2019 marked the 8th straight year that we have met or exceeded guidance for production, costs and capital. Our mines delivered strong results with production of 2,500,000 ounces and costs of $706 per ounce. Our 3 largest mines Paracatu, Tasiast and Cupo continued to lead the way, accounting for over 60% of our total production with the lowest unit costs in the portfolio averaging $6.26 per ounce.
Paracatu set a new production record of 620,000 ounces and reduced its average cost of sales by more than $150 per ounce to $6.66 per ounce. Later this quarter, we plan to publish our new technical report on Paracatu providing our long term view of this cornerstone asset. Tasiast also had a great 2019 with the 1st full operating year of the Phase 1 expansion and also had an outstanding Q4 with a new record for throughput production and cost per ounce. Cupol, a consistently strong performer, had another good year and a strong 4th quarter with the lowest average cost per ounce in the portfolio. Round Mountain performed well and was our next largest contributor to the portfolio, benefiting from the start of production at Phase W in the second half of the year.
Looking at Q4, Bald Mountain deserves mention for doubling production over the previous quarter as more ounces were recovered with the ramp up of the Vantage project. Overall, the portfolio performed well in 2019 and ended the year on a strong note. I'll now turn to some financial highlights for the Q4 and the full year. We increased our adjusted operating cash flow by over 30% quarter over quarter and generated strong free cash flow of approximately $110,000,000 in the 4th quarter. We ended the year with a cash balance of $575,000,000 and increased our liquidity to $2,000,000,000 all while funding a major phase of our development.
We completed our $300,000,000 asset recourse financing at Tasiast. As part of our portfolio optimization, we sold our Lundin Gold Shares and our royalty portfolio delivering additional cash to the balance sheet and we realized approximately $30,000,000 in annual cost savings in overhead and other operational efficiencies. Looking at our development projects and opportunities in 2019, we began production at Round Mountain Phase W and Bald Mountain Vantage and advanced our Fort Knox Gilmore project. We have also taken important additional steps to strengthen our future production profile, including the decision to proceed with the capital efficient 24 ks expansion at Tasiast, our acquisition of Chobatcan where we are excited about the upside potential based on results from our confirmatory drilling and the decision we announced yesterday to restart operations at La Coipa, a relatively small, low risk, high return project in an operating environment that we know very well. The restart of La Coipa is expected to begin adding ounces to our production profile in 2022.
Paul will talk a little bit more about this shortly. We also had another good year of adding resources and mine life at our existing sites. Over the past 8 years, our Brownfields exploration program has had considerable success offsetting depletion and extending life at our mines. This is a major reason why we have successfully maintained production at the 2,500,000 ounce level over the same period. In 2019, we added yet another year of mine life at Cupola and Toronto and also more than offset depletion at Paracatu despite significantly increasing our rate of mining and production.
With a large and growing M and I resource inventory and great exploration potential across the portfolio, we continue to see significant additional upside at these operations and others. Looking at our ESG performance in 2019 was another strong year and it builds upon our long history of taking these matters very seriously throughout our organization. We had one of the best safety records in our industry with an injury frequency rate on par with low risk non industrial sectors. The lowest energy use and greenhouse gas emission intensities among our gold industry peers, a continued focus on best practices and tailings management and a top tier ranking in the Globe Mail's annual survey of corporate governance. Mining responsibility will remain a first priority for Kinross in 2020.
Turning to the outlook for 2020 and looking further down the road, let me focus specifically on our trend for CapEx and all in sustaining cost and what that means for free cash flow. Our 2020 guidance for CapEx and ASIC are both lower than our actual 2019 capital expenditures and all in sustaining costs. At spot gold prices, we expect that our 2,400,000 ounces of production will drive strong free cash flow in 2020. And we believe that this positive trend will continue. We expect production will increase to 2,500,000 ounces or above in 2021 and will remain at the 2,500,000 ounces in 2022.
At the same time, we expect a further reduction in CapEx and all in sustaining cost in 2021 and again in 2022. With production expected to remain stable, this downward trend in CapEx and all in sustaining cost has the potential to drive significant free cash flow over the next few years. So to sum up, we had a great year in 2019 and are well positioned for another strong year in 2020. At spot gold prices, we expect significant free cash flow in 2020, which has the potential to improve again in 2021 2022. With this, we expect to further strengthen our balance sheet and liquidity and we are advancing our pipeline of high quality projects that see additional opportunities to extend mine life.
I'll now turn the call over to Andrea for more detail on financial results.
Thanks, Paul. I'll begin with a few financial highlights from an excellent quarter and full year. Looking first at Q4, we produced approximately 645,000 attributable gold equivalent ounces at an average cost of sales of $7.44 per ounce and an all in sustaining cost of $10.50 per ounce. We sold approximately 20,000 ounces more than we produced in the quarter, largely due to sales of inventory at Maricunga. The quarter had some impressive improvements in financial performance compared with Q4 of 2018.
Margins were up by 53% versus a 21% increase in the gold price. Adjusted operating cash flow nearly tripled to $388,000,000 Adjusted net earnings increased from $14,000,000 to $156,000,000 and from $0.01 per share to $0.13 per share. And net earnings went from a net loss of $28,000,000 to net earnings of $522,000,000 For the full year 2019, we produced 2,500,000 ounces and saw some key improvements over the full year of 2018. We reduced our cost of sales to $706 per ounce, which was at the low end of our guidance range. We increased margins by 27%, outpacing a 10% increase in the average realized gold price.
Adjusted operating cash flow increased 40 percent to more than $1,200,000,000 Adjusted net earnings went from $128,000,000 to $423,000,000 and from $0.10 per share to $0.34 per share, and earnings went from a net loss of $24,000,000 to net earnings of approximately $720,000,000 Capital expenditures were $298,000,000 for the quarter $1,100,000,000 for the full year at the high end of our guidance range as we noted in November. This is mainly due to decisions during the year to capitalize on value enhancing opportunities, including the 24 ks project at Tasiast. In 2019, we reported noncash impairment reversals totaling $294,000,000 including $161,000,000 at Tasiast and $133,000,000 at Paracatu. The Paracatu reversal was net of a related tax expense of $68,000,000 These impairment reversals are largely a result of higher gold price estimates. As part of our portfolio management strategy, late last year, we announced 2 of approximately $115,000,000 and the sale of our royalty portfolio to Maverick's Metals for total consideration of $74,000,000 which included $25,000,000 in cash and approximately 11,200,000 Maverick shares.
We ended 2019 with cash and cash equivalents of $575,000,000 a year over year increase of over $225,000,000 We also increased our total liquidity from $1,800,000,000 at the end of Q3 to $2,000,000,000 at year end and decreased our net debt to EBITDA from 1.3x to 0.9x. In short, we remain in a strong financial that we signed our $300,000,000 project financing agreement for Tasiast with the IFC and other international lenders. The loan is non recourse to Kinross and reflects a comprehensive process of due diligence with the lenders. This partnership in Tasiast underscores their confidence in the project and Mauritania's investment climate. We expect to make our initial draw on the loan later this quarter.
Turning to our outlook for 2020. This year, we expect production of 2,400,000 attributable gold equivalent ounces, slightly lower than 2019, mainly due to expected lower production at Paracatu and the completion of production at Maracunga as the operation transitions to care and maintenance. We forecast an average cost of sales of $7.20 per ounce plus or minus 5%, which is below our 2019 guidance. All in sustaining costs are expected to be lower than 2019 at $9.70 per ounce, plus or minus 5%. As is our usual practice, budget assumptions for metal prices, oil prices and currencies reflect a prudent buffer to spot prices, and we've provided sensitivities for these in our release.
For example, with every $100 per ounce change in the gold price above our budget assumption of $1200 per ounce, we expect to generate approximately $200,000,000 of additional cash flow for the year, positioning us very well at current spot Starting in 2020, we plan to separate out capitalized interest paid from capital expenditures in the investing section of the cash flow statement. Our CapEx guidance for 2020, therefore, no longer includes capitalized interest and stands at $900,000,000 plus or minus 5%. In 2021, we expect to further reduce our CapEx by approximately $100,000,000 with stripping at Tasiast and the completion of our North American growth projects. We expect to reduce CapEx
Our overhead forecast is
$150,000,000 I'm pleased to note that this is not only a reduction from 2019, but is also 50 $5,000,000 lower than our overhead guidance was in 2015 as we continue our considered and steady approach to reducing overhead and improving efficiencies. Other operating costs in 2020 are forecast to be approximately $100,000,000 in line with 2019 actual. About half of this is care and maintenance costs in Chile and at Cattle River on. DD and A
is forecast to be approximately $3.40
per ounce, plus or minus 5%, an increase over 2019 primarily due to impairment reversals and production mix. Let me also highlight 4 cash payments we have already made or will make in the Q1, namely the first installment of $141,500,000 for the acquisition of Chilbakken, repayment of the $100,000,000 that was outstanding on our revolving credit facility at the end of 2019, a semiannual interest payment of approximately $48,000,000 on our senior notes and a $40,000,000 income tax payment in Brazil given Paracatu's exceptional performance in 2019 and higher gold prices in the second half of the year. Of course, these amounts will be offset by the strong cash generation we expect from our business during the 1st and subsequent quarters of 2020. As Paul noted, with lower forecast CapEx and all in sustaining cost in 2020, we expect to generate strong free cash flow at spot gold prices. And with our CapEx and all in sustaining costs expected to decrease further in 2021 2022, we have the potential to continue to increase free cash flow in the coming years.
I'll now turn the call over to Paul Tomory for a review of our operations and development projects.
Thanks very much, Andrea. I'll review our operations side by side with some observations of full year and Q4 performance and a look ahead to the next year. Along the way, I'll give updates on development projects and highlights from our 2019 exploration and 2020 exploration drilling plan. As Paul mentioned, we had one of the best safety records in our industry and I want to thank our employees for our focus on first priorities. 2019 was a strong year at our operations with outstanding performance from our 3 largest mines of Paracatu, Tasiast and Kupol.
It was a big year for our projects as we launched the Tasiast 24 ks project, started production at Phase W and Vantage, advanced Gilmore and completed the La Coipa FS. Finally, it was a strong year for mineral reserve and resource additions and mine life extensions as a result of exploration engineering and acquisitions. We have a long record of success in maintaining reserves and extending mine life across the portfolio through our strong brownfields exploration program and based on the sizable additions to our resource inventory over the past several years, we see significant continued potential to see success in the coming years. In 2019, Paracatu benefited from a full year of multiple performance improvements including our asset optimization which has led to better ability to predict grade or hardness recovery and throughput, continuous improvement efforts that have increased mine and mill efficiencies and investments in site infrastructure such as water and renewable energy. Paracatu was the company's largest producer in 2019 with record output of nearly 620 1,000 ounces and a 19% year over year reduction in cost of sales to $6.66 per ounce.
In Q4, production at Parac was slightly lower, unit costs were higher compared with the previous quarter due to a number of factors including scheduled plant maintenance, higher proportion of waste haulage and one time labor related costs. We expect another strong year for Paracatu in 2020, but with lower production than our record in 2019 due to slightly lower grades and recoveries with grades improving in the second half. We had a significant year end addition of 828,000 ounces to mineral reserves at Paracatu as a result of a better understanding of the ore body and engineering changes to the mine plan. This addition more than offset the depletion of just over 700,000 ounces in 2019. Thus, despite higher annual production and an accelerated mining rate at Paracatu, the mine life still extends into the next decade.
At Tasiast, a full year production for the Phase 1 expansion resulted in record production and cost performance. Tasiast finished the year strongly with record quarterly production approximately 103,000 ounces at a cost of sale of $4.94 per ounce, the lowest in its history. Mill performance at Tasiast has continued to ramp steadily higher. Daily throughput averaged 14,300 tons for the full year, 15,000 tons for the 4th quarter, close to 16,000 tons in December and a truly impressive 17,000 tons plus per day in January. And this year, we expect to see continued strong performance at Tasiast surpassing 2019 levels.
I'll note that production is expected to be much stronger in the first half of the year as we continue mining higher grades in the West Branch III minuteing phase. We expect to complete this phase around mid year and then enter a period of stockpile feed, which will have more grade variability resulting in fewer ounces produced in the second half. We expect to rely on the stockpile feed until around the middle of 2021 as we complete stripping to access Phase 4 of the West Branch ore body. At the 24 ks project, we're making good progress. Detailed engineering is largely complete, initial debottlenecking in the processing plant is underway and demolition has advanced.
We remain on budget and on schedule to reach throughput of 21,000 tonnes per day by the end of 2021, 24,000 tonnes per day by mid-twenty 23. In addition, we've ramped up the mining rate and expect a total of 88,000,000 tons moved in 2020, which accounts for higher stripping costs in 2020. Moving on to Russia and the last of our 3 big operations. We had a strong quarter and an excellent year at Kupol Devoinov. Production was up 8% year over year due mainly to better grades.
Production from Russia is expected to be roughly in the same range in 2020 at approximately 500,000 ounces. And I'll note that we expect 2020 to be the last year of mine production from Devoinoy as we mine out the crown pillar. Meanwhile, our investment in exploration at Kupol continues to pay off. Since 2016, we have successfully replaced every year production at Kupol with reserve additions of 250,000 to 300,000 ounces annually, each of which extended mine life by an additional year. Our reserve addition this year of around 400,000 gold equivalent ounces is one of our largest reserve additions to date and adds yet another full year of life at our lowest cost mine out to 2024.
In 2020, we will continue our underground drilling program at Cupo with the aim of upgrading additional mineral resources to reserves. We've also begun grassroots exploration within the so called Kupol synergy project area, covering a radius of approximately 130 kilometers around the Kupol plant, targeting areas that could be economic to mine given proximity to the Kupol Mill. Our overarching aim which is now firmly in sight is to extend mine life at Kupol in order to bridge production at Chilbatcan. Chilbatcan has a compelling base case as relatively high grade near surface heap leachable deposit with an initial resource estimate of nearly 4,000,000 ounces and good upside potential. In the confirmatory drill results we published on our website, you will note that there is one hole returning 52 meters at 129 grams per ton.
However, we did not include this in our initial resource estimate as we want to conduct additional drilling in order to better understand this result. Our 2020 project development plan at Chulacan includes 55,000 meters of drilling including infill drilling to understand and define any potential high grade structure within the resource as well as growth drilling to further expand the resource. In addition, our exploration budget has earmarked $10,000,000 for step out drilling with our highly prospective 120 Square Kilometer license area where there are a number of untested targets and structural environments similar to the main Chulbacan deposit. We are excited by the potential of this latest acquisition and look
forward to reporting on the progress.
Turning now to our U. S. Operations, Round Mountain had a very good 2019 recovering strongly from a wall failure in the 1st part of the year and benefiting from the startup of Phase W production mid year. Round Mountain ended the year strongly with Q4 production up 26% over Q3 due to strong production from the new leach pad. We expect slightly lower production at Round Mountain in 2020 due to planned lower milligrade and longer haul distances.
At Bald Mountain, 2019 production was hampered by challenging weather conditions and a slower than expected ramp up to the Vantage project. However, I'm happy to say that Ball finished the year on a stronger note almost doubling production in Q4 when compared to Q3 with higher leach pad grades and more ounces recovered from the Vantage complex. Production in 2020 is expected to be in line with 2019 at Bald. We had good success in exploration adding 5 68,000 assets to mineral resources primarily from the top Winrock and Redbird drilling programs all in the North area. At Fort Knox, 4th quarter production was slightly lower and costs were slightly higher than the 3rd quarter.
Looking at 2020, we are working through many of the challenges we faced last year and expect production to be in line with the technical report. The Gilmore project remains on budget and on schedule as stripping advanced during Q4 and continuing into 2020. Construction is scheduled to start in the spring restart in the spring with completion of the heap leach and related infrastructure targeted in the 4th quarter. Moving over to Africa, Toronto was our smallest producer on an attributable lands basis. Full year production was lower than the previous year due to lower grades while improved mill throughput in Q4 led to increased production compared with Q3.
We expect 2020 performance at Toronto to be largely in line with 2019. And I'm pleased to note that we had good exploration success at Toronto in 2019 with additions of 320,000 assets to mineral reserves to more than offset depletion increasing mine life by another year to 2020. In 2020, we are sorry to 2022. In 2020, we are increasing our Toronto exploration budget to $10,000,000 as we plan to drill depth extensions at Aquaba, Syrah and Tano as well as exploring the high grade extensions at Obra with a goal of establishing another underground mine. Finally, turning to Chile.
On the one hand, we are seeing the end of production from Maricunga as the operation has transitioned into care and maintenance. On the other hand, we've received board approval to restart operations at La Coipa as we leverage existing infrastructure to mine the Phase 7 deposit. The La Coipa feasibility study contemplates total production of approximately 690 1,000 gold equivalent ounces from 2022 to 2024 at an average cost of sales of 5.75 dollars per ounce and an average AISC of $6.70 per ounce. Project economics are attractive with an IRR of 28% at our budgeted gold price of $1200 per ounce and an IRR of 42 percent at $1500 gold. The project plan includes refurbishment of the plant, mill camp and other infrastructure in addition to bringing over and refurbishing the mine fleet from Maricunga.
We will also be exploring opportunities extend mine life by potentially incorporating adjacent deposits at Peren, Coipa Norte and Cancan. This includes further technical studies and assessing permitting requirements as well as continuing commercial discussions with our partner. Our pre feasibility study at Lobo Marte is scheduled to be completed mid year and is based on commencing Lobo Marte production after the conclusion of mining at Phase 7 and the other potential opportunities at La Coipa. To conclude, in 2020, we will continue to focus on maintaining our excellent safety record, delivering strong consistent operating results and cash flow and continuing to deliver our projects on time and budget. And with that, I'll turn the call back over to Paul.
Thanks, Paul. Look, to conclude, I just want to start by saying I'm really proud of what our team accomplished in 2019, and I'm excited about our future. I do want to leave you though with a few key points to bear in mind. Over the past 8 years, our ASIC has gone down by approximately $100 per ounce And over the next 3 years, we expect ASIC to decrease further, increasing our potential for strong free cash flow. Over that same 8 year period, we have a proven track record of extending mine life and adding reserves across our portfolio while maintaining production at the 2,500,000 ounce level.
Going forward, with our large resource inventory, we are strongly positioned to continue extending mine life and maintain production at the 2,500,000 ounce level. And finally, we are very comfortable with our geographic footprint based on our strong local relationships and long history of steady successful operations in all of our regions, including nearly 10 years in Mauritania and 25 years in Russia. We believe these strengths among others bode very well for Kinross in 2020 beyond. With that, Ursula, I'd like to now open up the call to questions.
Your first question comes from Ralph Profiti with 8 Capital.
Good morning. Thanks for taking my question. I have 2 of them please, Paul and Paul. Firstly, at Paracatu, we're seeing more normalization of production levels, which you've telegraphed. Where can you tell me where you are on the mobile fleet investment?
And are we going to see incremental benefits in 2020 on productivity despite being lower on production year over year?
Yes. So Ralph, that's a good question. We're investing in the fleet. The shovel is being prepared right now. So we haven't yet benefited from the full impact of the new fleet.
But in the technical report, which we will publish next month, you will see the benefits of that ramped up mining rate. Really the drive there is to push more waste stripping westward where we see better confidence in grade and recovery. And what you're going to see in the technical part is consistent average production over the next 10 years of about 550 1,000 ounces a year. That'll be up and down, but it has been one of the results of our asset optimization.
I see. Okay. Yes. And on Tilbatcan, it seems like this is aligning nicely after La Coipa spending and ahead of depletion at Cupola. Is that the right way to think about this asset fitting into the strategy?
And is the next 2 to 3 years of drilling ahead of us really getting comfortable with the geology, the resource model and the mine plan?
Sure. Ralph, it's Paul. I'll start and hand off to Paul Tomory. Yes, look, I think generally you're right. The only point I wanted to add is I wouldn't necessarily assume that we're coming to the end of the Kupol mine life.
We've had an excellent track record. It is an underground mine. We still see a lot of potential. And certainly, when you look in the rearview mirror and what we've been able to achieve year after year, I'm obviously very hopeful and expecting that we'll continue that trend. So at a minimum, I would say it's perhaps a bridge from one to the other, but I'm hoping we'll do better than that.
Paul?
Our strategy at Kupol over the last 4, 5 years has been paying off on the as we have for the last couple of years, our intent is to work towards converting as we have for the last couple of years, our intent is to work towards converting those potential mineral reserves next year. And as I said in my prepared remarks, our intention is to bridge, Cubal to Chulbacan with the potential even for concurrent production. On Chulbacan, we are advancing the study based on the resource that we posted with our year end, the approximately 4,000,000 ounces. But we are also advancing drilling to see if we can grow that deposit and we've allocated quite a budget at Chulotkat for drilling and better understanding the ore body. We have $10,000,000 in the exploration budget and another $10,000,000 of study funds to focus on better delineating and characterizing the ore body.
But we got a lot of work ahead of us there and we like what we see thus far. You also put La Coipa in the mix there. La Coipa will be parallel to cupola production. We'll be ramping up La Coipa in 2022. And it'll at least with the current Phase 7 reserve that will bridge us to the end of 2024.
But as I mentioned again in my prepared remarks, even at La Coipa, we've initiated studies on 3 satellite pits that could or at least our intent is to bring them into the mine plan there.
I see. Yes, that's good clarity. Thank you.
Your next question comes from Greg Barnes with TD Securities.
Yes, thank you. Sticking with Chilbeck and Paul Tomory, these higher grade structures, particularly that one hole, what is your sense of what's going on there? And how likely do you think there are other additional structures like that?
Well, that's a very good question. I mean the numbers on that hole are obviously very a known part a known part of the resource in between 2 wider space holes. And it has impressive visible gold in that hole. And our plan right now this year is to put more holes in there to better understand the geology and the structure in that area. Our hypothesis is that there are high grade structures in there, but we need to do more drilling to prove that out.
Are you seeing anything from geophysics or geochem that outlines additional structures like that?
In short, yes. And that's part of what drove the hypothesis.
Okay. Just turning to Andrea, I might be pushing my luck, but you talked about 2021 CapEx coming down by about $100,000,000 versus 2020. So what should we think about on 2022 order of magnitude?
Hi, Greg. So yes, our CapEx for 2020, as we noted, is $900,000,000 which is decrease from what we spent in 2019. So as you said, we've noted that we expect to bring that down another $100,000,000 in 2021. And that's just really as we come out of the heavier stripping year at Tasiast in 2020 and as we complete the U. S.
Project. So beyond that, as we sit here today, we'd expect 2022 to be even lower than that. One of the factors being will be coming out of the spending at La Coipa, that's significant in 2021. Okay.
And what about capitalized interest then, Andrea? What ballpark number are we looking at for that for the next several years?
Well, I mean our interest our total interest the total amount of interest we expect to pay in 20 20 is about $100,000,000 and we said about $55,000,000 of that would be capitalized. And then going forward, obviously, it's going to depend on how much debt we have outstanding. But that's not a bad estimate to just consider stays in line going forward.
$55,000,000 of capitalized?
Yes. I mean, I would expect it to continue to be about half.
Okay. Okay. That's great. Thank you.
Your next question comes from the line of Fahad Tariq with Credit Suisse.
Hi, good morning. Thanks for taking my question. I think you partially answered the question, but I'd like to just come back to the reserve kind of profile and potential moving forward. As you look at across the portfolio, if you were to rank the different mines in terms of where you see the most reserve upside, how would you think about that? Is it really trying to squeeze a bit more out of Kupol?
Is it Chilbakken? Is it La Coipa satellites? Like just trying to get a sense of like where how you would rank in terms of where you see the most reserve upside in the call it midterm?
Yes. So the way I look at that is where have we allocated the most money and definitely Russia is number 1 there and that's a split between Kubl, Chil Bhakan. And as I mentioned in my remarks, we're now doing some grassroots work in and around Kupol. But I wouldn't I'd be remiss not to mention Toronto. We have a good budget there.
We have a good track record of reserve additions. We also added quite a bit of resources. So our focus if I were to summarize it, our real focus is on extending at Kupol and Toronto obviously because those have the nearest mine life end. But we're also focused in the U. S.
At Bald Mountain. We have some exploration at round. And as you pointed out, those satellite deposits trend at La Coipa. However, the
satellite deposits at La
Coipa are drilled inventory. Studies studies permitting and in the case of per annum commercial discussions. So to summarize, our focus really is Russia and Toronto from a high priority perspective and we're quite confident that we'll be able to continue our track record of reserve addition.
Just add as well, I mean that does not preclude the fact that we see a lot of potential at other sites where we have existing longer life resources such as Tasiast.
Yes, that's a good point.
I expect we'll have substantial increases there. Stay tuned as we get through the Lobo feasibility study and for some conversion to reserve there. So there's a number of certainly that's the exploration budget priority, but there's still depth in the portfolio to keep adding.
And I would just also highlight the 3 very large land packages we have at Cupo, Chuvacana and Bald Mountain, very large land packages with lots of untested targets.
Okay, great. That's helpful. And just a quick follow-up on Tasiast because you reminded me. Any update on the government discussions and where that is?
Sure. I'll take that. And look, I think again, in short, we have engagement with this new administration that was put in place in September. We've had a pretty positive dialogue and we feel we're moving in the right direction and I'm confident we're going to get an amicable successful resolution in the near term. I think what's important though here is context.
And as I said in my opening remarks, from a context point of view, we've been active operating now for 10 years really without incident. We've produced over 2,000,000 ounces. We successfully built on time, on budget a major capital project in the Phase 1. We've had CLA unionized negotiations with our employees. We've just approved another expansion.
And as Andrea pointed out, we brought in 4 new partners as into the asset with the project financing with certainly with IFC, EDC and a couple of commercial banks. All that on top of the fact that the mine is firing on all cylinders and breaking records, we're feeling really good about the state of play and the future in Mauritanian.
Thank you.
Your next question comes from Carey MacRae with Canaccord Genuity.
Hi, good morning. A question on La Coipa. It looks like about a 3 year mine life after the FS, I think the PFS was more like 5 years. Just wondering if you can provide a little color on what's changed at La Coipa?
Right. So the PFS incorporated 2 deposits Phase 7 and Peren. This FS is Phase 7 only. Peren remains in the reserve and has resources as well. And in the case of Peren, we have to advance some permitting work as well as finalize a commercial agreement with our partner.
There were the 65% owner in that deposit.
And then maybe on Tasiast, you mentioned the grade variability from the front half of the year to the back half of the year when you're in the stockpiles. Can you look give us one more granularity on what sort of grades you should expect and what the grade profile looks like?
Yes. This is actually an important point of view for the equity research crowd here because we are in just the geometry of the Tasi store body. It has big strips and then we're into the really good grade material. So we will be mining out the base of this West Branch 3 mid year. One of the things we did with the approval of the 24 ks project last year is we actually accelerated the mining rate.
That's partly what drove our CapEx to the high end of the range in the year. And then we will be relying on stockpiles into the back half of the year. And that will continue on until about, I'd say, late Q2 of next year. So what we're seeing in terms of grades is we're up in the high 2s over the next couple of quarters and as we get into the stockpiles we'll be probably at 2 or just below. And then in Q3 of 2021, we'll be ramping back up into 2 plus grade.
So it's not a dramatic drop, but it's not just that it's a reduction in grade. It will be more variable as we rely on stockpile, some of which are older and the inventories are less certain, but the average grade will be just under 2 in there.
Okay, great. And then maybe one last question on cupola. You mentioned Devoinoy reaching end of life. Should we expect a drop off in tons from Devoinoye or do you think you make up the tonnage from Kupol?
Again, that's a good question. So we will be finishing ore feed from Devoinoy this year. There will be some stockpiles that remain at Devoinoy. So the mine will end in 2020 early 2021, but there is a remaining stockpile. In terms of feeding the mill at Kupol, we will have sufficient mill feed to keep that mill full, particularly as we move into narrower vein, slightly lower grade material.
Great. Thank you very much.
There are no further questions at this time.
Okay. Well, thank you, Ursula. Thank you, everyone, for joining us this morning. We look forward to catching up with you all in person in the coming weeks. Thank you.
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