Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti 2022 first quarter market update. All participants are currently in listen-only mode, and there will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please also note this event is being recorded. I would now like to turn the conference over to Stewart Bailey. Please go ahead.
Market update call. We have on the line Alberto and Christine and the rest of the executive team. You will note the safe harbor statement at the beginning of the presentation that contains important information regarding forward-looking statements that may be made in this presentation. I do urge you to look at it. It is important. Without further ado, I'll hand over to Alberto to make some opening remarks. Alberto.
Thank you, Stewart. Well, good almost afternoon to all, morning to some. We start with safety. That is slide four, prioritizing health and safety of our people and communities. You can see the trend. We continue that downward trend, which is encouraging. Our total recordable injury rate is 1.19 per million hours worked. That's good in the context of, let's say, even our top peers in the ICMM and way below the average. We, however, continue to be focused on major hazards. Those are the few risks that can really harm or kill people, and we are focusing on those few and making sure that everybody in operations understands those risks and the few things that you can do to control them. Our emphasis on COVID-19 remains on vaccinations.
82% of the workforce is fully vaccinated. As we will learn later, again, that's still an issue in some parts of the world right now, in Western Australia. Let's move on to the next slide. These are some highlights. We already touched about safety, so let me probably go into production. I think we're pleased with how production has developed. Even if you see a flat production year-over-year, it masks a lot of obviously different scenarios. We had very solid production performances in Sunrise, in Tropicana. We'll see in Cerro Vanguardia, in Siguiri, and then others are just what was expected. Obuasi is doing well, but obviously less than the previous year. Geita is in a transition. We'll talk about that. Kibali is also. It should catch up.
It's lower, but all in all, like as I said, it's quite. Yeah, the trend continues, the trend that we saw in the second half of last year of more predictable and growth in many of the operations. I think one probably point that I would underscore is on grade. If you look at the appendix, you will see that the average grade of the first quarter is similar to the first quarter of 2021, and we haven't seen that in many years. We have actually been going down on grades since 2018.
This is just a result of the additional investment in sustaining business capital, in beginning to see more flexibilities on the mine and on giving the mines the resources that are necessary to have more predictable operations. Obviously, also the right people in the right place and the operating model, all of that contributes to more predictability. In this case now, I see it a bit as a turning point. When you look at costs, we are tracking below the industry inflation trend and below the industry. Our cash costs went up 4%. Inflation went up 8%. We will see it later in Christine's slides, that inflation was about $80 an ounce.
That's all on oil and reagents and a lot of the commodities, but we were able to counter that and limit as much as we could the increase to 4%. I probably also encourage you, if you open up by assets, you will see very different pictures, and you will see good progress in Africa, good progress in Australia, including in costs. We were expecting a significant increase in cost in Geita, but that was just from the transition from underground to open pit. But that should improve significantly later on in the year. I'll again touch on that when we talk about Africa. All in all, I think we were able to sustain the cost pressures, which was good.
We are investing much more in sustaining CapEx, so that obviously drives the absolute rise in all-in sustaining costs. We were pleased with the cash conversion. We were pleased with the more than $500 million that we have been paid via our Kibali DRC, and that obviously was a big contributor to a very healthy free cash flow of $268 million, even after funding the Corvus acquisition and paying the final 2021 dividend. We have a very strong balance sheet, low gearing, strong liquidity, and a balance sheet that can weather any changes in gold prices.
We're seeing a market. The volatility is extreme as of today that we're just living today, and gold price is also falling in this whole lots of volatility. We will be ready to fund what we need to fund, which is for the next years this sustaining sort of around $800 million in sustaining CapEx. All of this in sustaining CapEx is also framed within our Full Asset Potential that we've spoken before.
This is just a systematic process of going asset by asset, three months with teams that are joint teams by the assets, consultants, and then people from our technical experts from the chief technology officer and the chief development officer, and looking at the few things that can make a significant difference on the assets. We have completed the reviews and not totally, but mine in Sunrise, the diagnostic, and we're working on the design of the implementation program. In Siguiri, we're also quite advanced, and what we've seen confirms the potential of doing step change in each of our operations. Finally, in this process, probably mentioning of regaining competitiveness, we have our new operation in Nevada that's progressing well. I would highlight quickly, we are, we've completed the.
We're working on the feasibility of North Bullfrog, and we should complete that by the end of this year or beginning of 2023. We've commenced the pre-feasibility study at Silicon, and we're again continuing the drilling in other areas, Merlin and other areas. In terms of Silicon, we talked about the pre-feasibility study. We actually applied and received a permit. An eagle permit were received by the Silicon project in the quarter, and we now are moving for the licensing in North Bullfrog, and we expect to hopefully have that in between 12-18 months, six months for what is called the data adequacy review and about 12 months for the environmental impact study. That is progressing quite well.
Let me go into just the key metrics. Let's go one by one. I already talked about production and what's going on. We also spoke about total cash costs, corporate and marketing costs, slightly up, but more probably travel more than anything else. We're starting a bit of travel, not as before, but some, a bit of travel. Exploration, we are investing quite a bit. You look at what we're investing in exploration in brownfields, in Sunrise, it's about $35 billion in this year expected. In Tropicana, it's quite significant too, but we're happy with the results.
We talked about capital expenditure, that will be within guidance on midpoints, about $800 million in sustaining CapEx and about something between 250 or something like that or 300 on growth. Probably that's where we talked about the cash flow already and that how it was so significantly up. If we go now to production Africa, see a very good quarter in Africa, both in production and in cost overall. Again, there's the exception of, it's not an exception in Geita. We knew that we're in this transition, but we also we expect a significantly better performance as we finish this transition into the open pit of Nyamulilima.
If you look asset by asset, Iduapriem production was higher as the mine treated the higher grade ore tons from block five and cut two, higher production. Costs improved by around 10%. At Obuasi, the ramp-up continues. As we've said, we are on track to achieve the 4,000 tons per day by the end of the first half of 2022. We would've seen about 3,000 tons per day even in the last month, and production for the period was close to 40,000 ounces. We're making good progress. Phase III of the project aims to increase production to 5,000 tons per day. That continues in progress. There's a lot of activity. There's many things on the critical path, but so far we're quite pleased with how Obuasi is progressing.
Siguiri also continues to show meaningful improvement through a combination of better grades and higher throughput. Costs were marginally better, but we were impacted quite a bit by inflation costs and cost base across mining and processing. The Full Asset Potential should allow us to regain cost competitiveness in Siguiri and put the cash costs back, let's say, under $1,000 into the 900s. Geita, we spoke about that. That's again a tier one mine. It's in this transition, but as I said, we should end up the year versus the first quarter with significantly better grade, significantly better production and significantly lower costs. Then Kibali production was lower, but lower throughput as a portion of mine was used to replenish stockpiles.
We should be within guidance, and it should continue to do well. A very good all in all performance by the Africa team. If we go to Latin America, unfortunately, it was a very challenging quarter for Brazil. Production was adversely impacted by intense rainfalls in Minas Gerais. We lost a lot of production. 10 days of lost production in Cuiabá and a month of lost production in CDS. That's just put our cash costs in untenable, unsustainable sort of levels. Having said that, if you, we're gonna start separating in time between Cuiabá and CDS. Those are very different assets. If you look at South America, Cerro Vanguardia performed well. You look at their cash costs, look at their production.
Cuiabá also performed well, and we expect it to have a good performance this year. The cash costs were slightly higher, but not much. You have significant impact of CDS. You have Serra Grande with an enormous impact in cash costs, about $400 an ounce because of, again, the rains and the delays. Having said that, we do expect Serra Grande to be able to go back to the cash cost of last year of last quarter by the end of this year or beginning of next year. What else? We've spent about $30 million on TSF conversions in the first quarter and expect to spend close to $70 million for the remainder of the year.
That is still putting an enormous amount of pressure in our cost. The TSF investment is expected to remain material in each of 2022 -2025, but it will decrease over time. I think that would be it on Latin America. If we go to Australia, we would start by saying that the labor situation remains challenging. Despite the recent opening of the borders, we still are experiencing severe skill shortages. And that is more than having an impact on the production will cause us problems in the longer term that we do need to remedy. We're still worried about the very low unemployment levels across the country and the lack of getting skilled labor. However, there is a positive note.
We're starting to see improvement in labor availability in April as COVID-19 related absenteeism begins to ease. Despite of these challenges, again, what the mine leadership did was obviously focus the scarce resources that we had on production. You see Sunrise Dam produce 61,000 ounces compared to 46,000 during the same period last year. A very noticeable improvement. That was a combination of improved mill feed grades and metallurgical recoveries. As we reported back in February, the grade reconciliation has gone back in line with expectations. In terms of cost competitiveness, the costs are still high. They will always be high.
I think that's one of the few good operations that will still, we will still see in two or three years, let's say cash costs in the $1,100 levels or something along that. It's in a very good jurisdiction. It complements very well with Tropicana. We will embed, we've concluded the initial steps of the Full Asset Potential, and our priority will be focused in improving the quality of ore delivered to the mill. Basically, this is an issue of developing the success that the exploration team has had in the different ore bodies, Frankie and others, that it has uncovered, and making sure that we have the feed that will allow us to fill the plant and lower the costs.
Tropicana's production was 66,000 ounces compared to 58,000 during the same period last year. Again, we're quite pleased with that. We're quite pleased with the investment in the Havana waste stripping that continues to progress. That was one area where we had to, some months ago, pull back because of the issues of labor, but hopefully we will be able to. We have plans right now to renew this, which will be key for the forecast that we have for improving production in next year and beyond. I think that. You can see both Australia, a good quarter, better production, better cash cost, and especially the trend is quite good. Let me, for now, hand over to Christine to cover the financials.
We had a solid cost performance in first quarter, and that was underpinned by operational improvements during our inward investment program at Obuasi, Geita, Iduapriem, and Tropicana, and also in tailings compliance in Brazil. Our cash costs came in at $1,041 an ounce, with a year-over-year increase contained to 4% or $42 an ounce, and that was despite inflationary pressure and other uncontrollable factors. Our overall focus remains on improving our operational performance, tightening cost discipline, and delivering on our Full Asset Potential program. Inflationary pressures contributed about $82 an ounce or 8% to cash costs. There were also higher royalty costs of $3 an ounce, which was linked to the higher gold price. This upward pressure on costs was partially offset by favorable foreign exchange movements of $10 an ounce.
Our controllable factors had a $33 an ounce favorable impact on costs, and that's notably with the stockpile and gold in process movements that were such a big feature in the first quarter of last year, and that did not repeat this year. Certainly, we also saw favorable by-product credits of $20 an ounce, which were also partly offset by lower grades and efficiency. As Alberto mentioned, the flooding in Brazil impacted group cash costs by about $21 an ounce in the first quarter. We saw a production impact of about 10,000 ounces in Brazil. We estimate $36 million in total infrastructure damage. Of that $36 million, $2 million was spent in the first quarter, and $23 million will be spent in the remainder of 2022.
What this did was increase the all-in sustaining costs at AGA Mineração by about $280 an ounce in Q1 and estimated at about $118 an ounce for the full year. The inflationary pressures we warned about last year have become more acute, particularly towards the back end of the first quarter as the Russia-Ukraine conflict impacts global supply chains and the cost of inputs like oil and gas, explosives, lubricants and cyanide. Overall, we experienced mining inflation of about 7%-8% for Q1, and we expect inflation of around 9% for the full year. Labor and mining contractors are our largest cost components at approximately 65%.
Here we saw an average inflation of 6% and 10% respectively in the first quarter. From an oil price perspective, we saw inflation of around 20%. Oil in itself comprises about 12% of our input costs. Our current outlook for the rest of the year is around $100 per barrel versus our guidance assumption of $80 per barrel. We do continue to manage our supply risk through increased inventory levels, which have certainly helped delay inflationary impacts. We're also collaborating with strategic suppliers to explore forward buying, especially explosives and cyanide, and in our built-in rise and fall mechanisms in our main contracts. Moving on. Open pit grades were about 15% lower quarter-over-quarter, and that was primarily due to Geita.
We lower grade ore from Nyamulilima, replaced the higher grade Nyankanga Cut eight stockpile that was processed in the first quarter of last year. We saw recovered grades from the underground were about 8% higher year-on-year, with improved mill feed grades and metallurgical recoveries at Sunrise, Geita, as well as improvements at Kibali and CVSA, and those more than offset lower grades in Brazil, where I spoke earlier to the impact of floods, both on grades and volumes. Obuasi saw 30% lower yields due to the treatment of tailings materials. Moving on. All-in sustaining costs were about 9% up to about $1,405 an ounce, driven by the higher cash costs and our planned increase in sustaining capital.
In this figure is about $5 an ounce incremental COVID-19 impact and $52 an ounce for the Brazil tailings compliance. Our sustaining capital, which includes the equity account of JVs, that increased by about $26 million or about 18%, compared to last year. That was mainly due to the tailings spend, stripping at CVSA and the development at Obuasi. Our inward reinvestment to extend mine lives and to improve operating flexibility remains a key priority for us. Moving on to the balance sheet. Our balance sheet remains in a solid position with long-dated debt maturities, low leverage and $2.5 billion in liquidity.
Adjusted net debt of $970 million at the end of the quarter is 1% up year-on-year, and includes the $365 million January payment for the Corvus acquisition. The adjusted net debt to Adjusted EBITDA ratio was 0.51x at the end of Q1, and that was after accounting for the Corvus payment, the final 2021 dividend of $60 million and our elevated CapEx. The cornerstone of our strategy is disciplined capital allocation and self-funded improvements in the balance sheet over the long term. Our leverage target remains below the 1x adjusted net debt to Adjusted EBITDA target through the cycle. Strong liquidity equals good flexibility. We have around $1 billion in cash even before factoring in our remaining $230 million in the DRC.
That was the end of Q1 and an undrawn $1.4 billion revolving credit facility. From a credit ratings perspective, Moody's last month affirmed our Baa3 investment grade rating and lifted the outlook to stable from negative, and that was in line with the South African sovereign rating. In February, Fitch also affirmed our BBB- investment grade credit with a stable outlook. Last month, S&P affirmed our BB+ sub-investment grade credit rating and changed the outlook to stable. Moving on to cash lockups. As Alberto mentioned, our cash conversion received a boost from the $326 million received from Kibali in the first quarter, and that was in the form of a shareholder loan repayment.
Our remaining share of the outstanding cash balance at the end of March was $232 million, and that has come down further with the $210 million we received last week. The outstanding balances owed to the group in form of cash, VAT receivables and export duties came down by 20% during the first quarter to $637 million. If the additional $210 million cash distribution from Kibali after the quarter end is included, this reduction is 51%. That lockups at Geita and Kibali and export duty receivables at CVSA remain a challenge. In Tanzania, the net VAT receivable increased by $13 million - $155 million.
The current VAT receivable of $37 million should be seen as a timing issue as the tax authorities experienced some technical systems issues in the first quarter. We have verified VAT refunds of $22.5 million, which are available to offset against corporate taxes going forward. We continue to engage with the Tanzanian authorities regarding the mechanism to recover the historical VAT accumulated between July 2017 and end June 2020. That amount is $118 million, which is net of discounting provisions. In the DRC, our share of recoverable VAT and fuel duties increased by $6 million -$79 million at the end of the quarter. In Argentina, the export duty receivable remained largely unchanged during the first quarter, and that's approximately $20 million.
Cerro Vanguardia had a cash balance equivalent to $151 million at the end of March, of which $105 million has been declared as offshore dividends. Application has been made to transfer these funds to the central bank. The total cash balance continues to be invested at very attractive rates of return locally and does remain fully available for Cerro Vanguardia's operational requirements. From a guidance perspective, we are on track to achieve our full year guidance for 2022 as the stabilized operating trend continued and sequential quarterly improvements in production and costs are expected for the remainder of the year. In line with past trends, production this year is expected to be second half weighted with Obuasi expected to ramp up by mid-year.
We're also expecting marginal improvements at Iduapriem, Siguiri and Geita, and steady performance is expected at the remainder of the assets. Our production is tracking expectations except for Brazil, where we saw the heavy rainfall disruptions. From an inflation perspective, we are managing this proactively while we do focus on embedding the new operating model, which will improve operating efficiencies and we are implementing the operations excellence initiatives alongside the Full Asset Potential review. As we previously communicated, all-in sustaining costs are expected to be between $1,295 an ounce and $1,425 an ounce. That is consistent with last year's levels. Our elevated sustaining CapEx underpins our reinvestment strategy. Our unit costs are expected to decline into the second half of the year as production ticks up.
Based on the planned production profile, we expect that unit cash costs and all-in sustaining costs will track around the top level of the annual cost guidance ranges for the first half of the year. That is before trending lower and within the guidance ranges in the second half of the year. The average gold spot price received is currently forecast to be more than $1,800 per ounce, with our original guidance based on an assumption of $1,650 per ounce. The higher revenue directly impacts revenue royalties, and that is expected to increase cash costs by about $11 an ounce, and that we're comfortable that this does remain within the overall guidance range. Cost pressures as a result of rising inflation and higher than expected oil prices are expected to continue through the remainder of the year.
From a capital expenditure perspective, we've guided $1.05 billion-$1.15 billion, and that comprises sustaining capital of $770 million-$840 million, which includes $100 million of tailings capital for Brazil. Our growth capital is guided at $280 million-$310 million and includes remaining funding for Obuasi phase III. About $100 million for Havana stripping at Tropicana, and $60 million for a new TSF at Iduapriem. The remainder of the capital is spread between Geita, Siguiri, and the Colombia feasibility studies. We do remain mindful that the further waves of COVID-19 and its impacts on communities and economies, that the actions that authorities may take in response are largely unpredictable.
Our guidance, therefore, continues to exclude any incremental impacts on production and costs relating to the COVID-19 pandemic, which thankfully have been muted so far this year. Argentina was impacted earlier in the year and is almost back to normalized underground capacity. Western Australia remains high risk and will continue to be monitored. Finally, to conclude, this marks my last results presentation for AngloGold Ashanti. I will certainly miss my colleagues here, and I would like to register my sincere appreciation and convey my thanks to all of you, as well as to the entire team for their unwavering support during my tenure.
I'm pleased to leave the company with one of the strongest balance sheets in recent memory and plenty of liquidity, and that should provide Alberto with the much-needed firepower as he pursues the next phase of the company's disciplined growth strategy, and I wish him all the very best in this regard. With that, I'll now hand over to Alberto to conclude. Thank you.
Many thanks. Many thanks, Christine. I said we've I think it's a good solid first quarter. We are very aware that we just need to keep delivering on operational excellence and discipline and keep delivering every three months, every six months. We start obviously by keeping our people safe and well. Supporting the communities is the priority. You've seen in this presentation that we are on the right track. We remain committed to transparent reporting, not only on emissions, but also on all the risks presented by changing climate and all the steps that we're making. To mitigate those, you will hear from us in some months what are our interim targets for CO2 reduction by 2030.
We're almost finished with that work, and we should be able to present it publicly that interim step between now and 2050 or before, where we plan to be at net zero. We've started to see one of the big focus has been the operating model and basically doing the basics right. We've seen that now in operations, in operating improvements. People, there's much more clarity around accountabilities. I think especially the operations are very clear what they need to do. As a consequence, we're seeing a much more predictable company and probably doing what we say we're gonna do. Probably one critical area of focus because it has such a massive impact in the company, and it was so traumatic last year, was Obuasi.
We're pleased with the development of Obuasi. There's certainly a lot of work still to do, but we are way on our way to deliver what we've committed, 4,000 tons per day by June. We're already at between 3,000 and 4,000 already, so we should be able to, barring any issues, deliver that. Then, consequently, the target of around 250,000 ounces for the year. But at the same time, we are focusing on the development project, the KMS, and everything needed to then ramp up to 5,000 tons per day by the end of 2023, and hence, take this mine to its potential, which is around 400,000-450,000 ounces by 2024, 2025.
If we go to the last, then I'll conclude here, AngloGold Ashanti. We, as probably I started saying, we have a high-quality asset portfolio, we have a self-generated project pipeline, we have excellent people and a very strong balance sheet. Those are the critical foundations to make long-term success of any mining company. We're far from our potential. We're making progress, but we need to continue to work very hard on all the areas that we've spoken before. We are starting to achieve our main catalyst. We have, as I said, a much more focused operating culture. We are having a more predictable operations, predictable in cost, predictable in grade. All of the investment we've done in sustaining CapEx is beginning to bear fruits.
As I mentioned before, this quarter is probably the first one since 2018 where we have a stable grade, and I think that's gonna be an important turning point for the company. In terms of the leadership team, it's a combination of experienced leaders and new leaders coming from a lot of experience in gold mining, both our new CTO and our CDO, and also long experience in resources and mining in the HR space. That combination between very senior experienced people existing and new blood, I think is responsible for this new focus and this new results in terms of delivering predictable outcomes. I'm happy with how things are progressing.
I think, as I said before, that we are on our way, and we have a clear plan. The Full Asset Potential that I spoke before will be a centerpiece of recovering cost competitiveness that we lost some years ago. We understand what we need to do to take AngloGold Ashanti back and its valuation back among its place among the top gold mining companies in the world. With that, I thank you for listening, and I open to questions.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star and then one on your touch tone phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you wish to withdraw your question, please press star and then two to remove yourself from the queue. Participants on the webcast may submit their questions on the text box provided. Our first question is from Dominic O'Kane of JP Morgan. Please go ahead.
Good afternoon, Alberto and team. I've got a question on capital distributions and shareholder distributions. Very positively, during the quarter you've indicated that you received over $500 million back from the DRC. The net debt EBITDA of the company is, as you said, looking very healthy at 0.5x. You talk about the long-term target of minimizing net debt EBITDA at around about 1.0x. What do shareholders need to see for excess capital to come back? What milestones do you think, in terms of your outlook for the company this year and into next year, do you think need to be achieved before we can start to think about maybe some excess capital returns beyond the 20% under the ordinary dividend policy?
Thanks, Dominic, for the question. Look, this new policy was approved just, I don't think even a year ago. One of the things that I've said, well, for the time being, I think it's something that we can continue. If we knew that the gold price was gonna stay where it is, I'd probably think differently, but obviously none of us know. What is clear to me is that a lot of the troubles that we got into is from under-investment in sustaining capital.
I think that the best way to add shareholder value is these like two or three years of significant investment around $300 an ounce that will give a lot of the mines the flexibility it needs and have the number of years of reserves and number of years of resources necessary for a company like the type of company that we want to have in AngloGold Ashanti. I think that will then by having more money on exploration. That will allow us to have better two-year and then five-year plans and everything related to a more predictable company.
Once we have that funding, we will go down to around $220 an ounce in a short space of time, let's say. I've said in 2024, let's say 2025. If we have obviously accumulated more capital, we will obviously reconsider things. But for now, we just wanna make sure that whatever happens to the gold price, let's say under a 95% probability, we can fund the necessary investments that we need internally.
Okay. I mean, if we have a scenario where the gold price is flat or slightly higher or higher for the rest of the year, is there a net debt EBITDA where you'd feel comfortable maybe being a bit more ambitious?
At this stage, really, we haven't focused on anything else. Look at net cash, which is interesting. Of course, we have a very positive net cash, but that is around the Kibali. Without Kibali, our net cash wouldn't have grown that much. We'll see.
Understood.
When we're generating.
Thank you.
A lot of net cash without sort of extraordinary things, we can talk again. Right now, I think the policy is. It will stay.
Excellent. Thank you, Alberto.
Thank you. The next question is from Jared Hoover of RMB Morgan Stanley. Please go ahead.
Afternoon, Alberto and team. Thanks for the call. A couple of questions from my side, please. First, just on your guidance. I know you've guided to having a much stronger second half on first half, but I think at the beginning of the year, in February, during your full year results, you mentioned that there was gonna be a 45-55 split of production for the full year. I just wanted to see if that is more or less still intact. That would give me a good guide as to what is to come for production in the next quarter. Aligned to that, I just wanted to confirm that, I think, Christine, you mentioned that cash costs and all-in costs will trend towards the top end of the range for the first half of the year.
Because if that is the case, then it looks like you're looking at a cash cost of about $990 for the second quarter. Just wanted to confirm that, please. My second question is on Sunrise Dam. I think, Alberto, you mentioned that the cash cost profile is gonna be about $1,100 for the next two-three years. I just wanted to find out what is driving that. Is that a factor of it being a refractory ore body and you not necessarily having the infrastructure to get the recoveries up quite meaningfully? Or is it a factor of prioritizing short-term production over longer-term development because of the COVID situation in Australia? I'll leave it there for now, and then I'll follow up with one more. Thanks.
In terms of production, it's still what we said is intact. You're right, that 45-55. We do expect more production. That also spills over. We expect better cash cost in the second half than in the first half. Also, this is driven by what I said before on Geita. Geita and Obuasi, probably and Kibali, but Geita and Obuasi have a very significant impact on the cash costs on the company. Both we expect to have a significant better second half. That will pull everything down. Having said that, we do expect to be on the probably higher end on cash costs and all-in sustaining costs, still within range, but at the higher end.
If we talk about Sunrise, what I said is that we can get after Full Asset Potential, so not in the short term, but in let's say two years or three in the $1,100-$1,100. That ore body is an interesting one, but it's just the geology of the ore model. The grade is not very high. It is a very expensive jurisdiction. Yeah, I visited recently, for example, but the ore body requires that we go down to grind it to 10 microns, which is a size about 10 x smaller than what Tropicana needs, for example, to get the gold out. So it's just by geology, I think more than.
It's nothing in the long run, nothing more than that. It will be probably difficult to have it ever like an African operation. Having said that, it is obviously in a very good jurisdiction and together with Tropicana, it will be a very profitable operation at most gold prices that we can see. It will be maybe on the high end of the cash cost of all of our operations.
I guess my follow-up to that is, I mean, at $1,100 cash cost, it probably still looks like a bit of an outlier in the AngloGold Ashanti portfolio. Although you might be making money from it depending on what the gold price is. I think one of your earlier comments, you also mentioned that Tropicana and Sunrise Dam complement each other. Apart from the fact that they're in the same jurisdiction and potentially sharing overhead costs, are there any other synergies between the two mines, that might make you want to keep it within the portfolio? I'll leave it there. Thanks.
Yeah, there are some. Obviously, it is a business unit that obviously affects both of them. It is when you look at risk profile, it's not only profits but discount rates and all of that. I have to say, we looked at it for a while, but at $1,100, I think it is still worth more inside AngloGold Ashanti than outside. Christine wanted to clarify something.
Yes. Thanks, Alberto. So you're completely correct on the H2 is really where we see the cash cost improvement coming through. I just wanted to clarify for Jared, in Q2, you can expect to see cash costs likely higher. Of course, you know, as we spoke, there's also the Brazil rainfall impacts that actually do compound that. But then, you know, so expect to see cash costs a bit higher than what it currently is, you know, in Q2. And then it comes down in the second half of the year to.
Okay. Thanks, Christine. Just to clarify, Christine, you meant 2Q cash costs will be higher than 1Q or higher year-on-year?
It will be higher than both last year's half-year number, and it will be higher than Q1.
Okay, perfect. Great. Thanks, Alberto. Thanks, Christine. All the best on your next chapter, Christine.
Thanks, Jared.
Thank you. The next question is from Tanya Jakusconek of Scotiabank. Please go ahead.
Yes, good afternoon, everyone, and thank you for taking my question. Just, Christine, if I have you on just to continue on the guidance or even Alberto, thank you for giving us the 45-55. Can I just confirm that you mentioned it's gonna be quarter-over-quarter improvement through the year? That would imply a better Q4 and Q2 slightly better than Q1 operationally on the production side or should we look at it flattish in Q1, Q2?
I probably don't wanna get too much into. I'm sorry, into now giving guidance per quarter. I would just say that directionally, Obuasi, which is an important one, obviously will have a better Q2 than Q1 and then a much better H2 than H1. I can also say that Geita, it will have a better H2, Q2 than Q1 and a better H2 than H1 as we get into Nyamulilima into zones with better grades. I think both of them will have an impact. I don't wanna at this stage saying expect.
Christine already well told you well, we'll see in cash costs we should see something worse, but yeah, let me keep it at the yearly level for now.
Okay. Could you provide then just, maybe on the, capital level, just how the distribution would be over the year? Like, I think we had been guided that the first half would have heavier spending total, than the second half. Maybe just our all-in sustaining costs, would you be able to give a bit of guidance on that? First half, second half.
We had planned for a 55-45. At this stage, it may be probably going more to a 50-50. I would probably put that in the models more around that 50-50.
Okay. That's very helpful. Thank you. Maybe I just wanted to ask a general question on just, you know, we've talked a lot about inflationary pressures that you've seen in your cost structure, and we really appreciate some of those insights, and especially on the labor and some of the others. Can we talk a little bit about what inflationary pressures you're seeing on the capital side? You know, given that you do have some projects that you are moving forward on, you know, Gramalote being one and obviously, Obuasi expansion and then ultimately Quebradona. Just for us to understand what sort of inflationary pressure should we be thinking about in those capital costs?
Yeah, we are seeing probably similar or higher levels of cost pressures in projects. In a lot of these, we are still on feasibility, so we're not going into execution yet. Preliminary, I can say that we are seeing, yeah, 8% and even 10% sort of pressures. It is an issue. It will become an issue.
Do you feel that it's just the pressures, anything that would impact timing of any of these projects? Slippage because of you know?
No, not at this stage.
supply chain issues and/or COVID?
No, not at this stage. We're actually. It's not related to that. I think the big worry is Obuasi. I wouldn't say that it's really affecting timing. It may be, it creates some complexities in terms of, for example, the phase base plant being a bit more delayed. But I wouldn't say at this stage that it's creating issues. Certainly we don't see issues in Nevada, so not. It's more the cost pressures that we're seeing overall probably in Obuasi. It's gonna be another 10%-11%, something like that of cost pressures, more than we thought it was gonna be.
Okay, that's very helpful. Thank you. Maybe if I could ask just one final one on, you mentioned, Alberto, the decline in cost at Siguiri in that sort of $900-ish level down from I think you said over $1,000 or thereabout. Is that still part of that asset improvement program that we would see that in a couple of years' time or what's driving it?
Yes. Yeah, no, that is exactly that. Just better and it's all around, it's gonna be on, basically metrics of, productivity and, mine planning, better mine planning.
Okay. That's very helpful. Thank you so much. I'll leave it to someone else to ask. Appreciate the insights. Christine, all the best to you.
Thank you, Tanya. Thank you very much. Ladies and gentlemen, we have no further questions in the queue, and I'd like to hand the call back to Mr. Calderon for some closing comments.
Okay. Well, thank you all for your questions, your participation. I am not accustomed, but I'm beginning to get accustomed to this, that we meet so frequently every three months. Let me just close with repeating our message. We are, it's a long road ahead, but we are happy how we're progressing. We're happy with the people. We're happy with the predictability and, yeah, we hope to keep delivering. I will be biased more towards delivering than committing or promising too much. Yeah, we will be talking quite frequently. Thank you all.
Thank you very much, sir. Ladies and gentlemen, that then concludes this event, and you may now disconnect.