Good afternoon and good morning, everybody, and welcome to AngloGold Ashanti's first half results presentation. Before we get into the presentation, I would ask you to look at the safe harbor statement at the front of the presentation as always, which contains important information regarding the contents of this presentation and the remarks made around it. I urge you please to read it. We've got a full slate of presenters today, as always at the half. I'm going to hand over to Christine to make our opening remarks.
Thanks, Stewart, and good day everyone. Regrettably, we recorded two fatalities over the half, the first at Serra Grande mine in Brazil and the second at Obuasi in May. Our efforts are aimed squarely at eliminating all injuries and especially fatal accidents from our operations. We are implementing our revitalized safety strategy, focused on the controls needed to eliminate high consequence, low frequency events from our sites. We continue to invest considerable resources in understanding the root causes of all accidents and also high potential incidents or near misses in order to prevent recurrences. Our emphasis on COVID-19 remains on safely ensuring business continuity. We continue to work hand in glove with authorities and local communities to provide healthcare support and also assistance in other areas that are feeling strain from the pandemic.
Access to the vaccines is improving in our operating jurisdictions, with all sites making good progress, with about a quarter of our workforce having received their first dose. About 9%, mainly from Iduapriem and Obuasi, have been fully vaccinated. Momentum is picking up, and higher vaccination levels will be a significant plus for our employees and our business. Still, we saw an impact on the business from a production and cost perspective and with respect to moving people around to our sites. The first half has been challenging. The ongoing pandemic has had a direct and secondary impact on production and costs. We also saw lower grades across certain operations and the suspension at Obuasi following the fatality in May. Graham will cover that in more detail in a few minutes.
These headwinds came amid a period of elevated investment, first to transition our Brazil TSFs to dry stacking and second to increase reserve conversion, stripping, and underground development. We completed 465 km of brownfields drilling over the six months. We're growing the Frankie ore body at Sunrise Dam and seeing high-grade intercepts at Nyamulilima, confirming the scale and growth potential of this open pit ore body at Geita, which will be in production at year-end. 2021 and 2022 remain important transitional years, with the added waste stripping and development alongside lower grades and stockpiles drawdowns. You'll notice that we relied on stockpiles more than planned at certain operations. At CVSA, we used them to offset the continued direct impacts of COVID-19. At Obuasi, they fed the plant after the May shutdown.
At Sunrise Dam, we used them to supplement underground production given poor grade reconciliation, which improved in Q2 but remained below plan. At Iduapriem, Cut 2 was delayed, and at Geita, underground tons fell short. We see both the lower mine grades and the use of stockpiles as temporary. Our inward investment program will improve our flexibility and access to higher grades. Increased vaccination rates across our business will alleviate pressure, skills availability, and efficiencies, allowing us to meet physical targets. There's also been significant pressure on costs related to the TSFs transition in Brazil, but this will also be transitory as this program winds down early next year. Looking at production, we produced 1.2 million ounces for the half, which came with good improvements from Iduapriem and also the solid performance from Tropicana.
Reinvestments in our bigger assets, Geita, Tropicana, and Iduapriem, have tracked well and remain on schedule. Brazil is working aggressively to complete its tailings conversion to comply with new legislation. The higher oil price was a key driver of inflation across the group, along with COVID-19 productivity and wage-related increases. In Australia and Brazil, competition for key mining and related skills, which we spoke to in May, remains a factor, driving salaries higher and, in some instances, causing key personnel shortages. COVID-19 impacted production by 42,000 ounces and all-in sustaining costs by $54 an ounce. All-in sustaining costs were also higher because of the higher cash costs and the planned step-up in sustaining capital.
Free cash flow was impacted by the lower gold sold and the tire costs. Also, increased tax payments and the slow cash repatriation from Kibali. Net debt was down 41% year-on-year and gearing at 0.37x , which sits well below our target. We've declared an interim dividend of $0.06. On guidance, we revised guidance to factor the challenges at Obuasi and the higher than expected costs we are seeing. Ian will unpack that in detail. The Obuasi suspension is clearly a setback. A necessary one as we look to set up the mine for a very long-term future. We remain confident of its long-term value proposition. At Quebradona, we completed the feasibility study. The environmental and mining applications are with the authorities. Detailed engineering for early works and finalization of contract pricing for mine access and earthworks are continuing in the meantime.
Lastly, the proposed acquisition of Corvus is firmly aligned to our strategy of growing ore reserves, building low-cost production, and generating sustainable returns. With that, I'll now hand over to Ian, who will talk to the financials.
Thank you, Christine, and good day, everyone. First half production was 123,000 ounces, or 9% lower year-on-year. We saw solid production performances at both operations in Australia at Kibali, Iduapriem, Geita, and CVSA. Obuasi progressed its ramp-up efforts despite COVID challenges until suspension of production on 18 May. Adjusted EBITDA decreased by 15% to $876 million from $1.04 billion last year. Total capital expenditure increased by 33% year-on-year to $461 million. This was driven by a 56% increase in sustaining CapEx to $311 million, mainly due to the higher Brazilian tailings investment and continued stripping at Iduapriem and Tropicana. A sustaining CapEx spend rate of $256 per ounce was achieved, below our estimated $270-$290 per ounce level for the year, but in line with expected levels for the first half.
We saw a free cash outflow of $25 million impacted by lower gold sold, higher costs, and higher taxes paid, partly offset by the higher gold price. Yeah. We received dividends of $71 million from Kibali, compared to $54 million in the same period last year. While our attributable share of Kibali's cash awaiting repatriation was $485 million at the end of June. Free cash flow before growth capital, the metric on which dividends are calculated, was $125 million, resulting in a dividend declare of $0.06 per share. Our cash cost increased 30%, or $233 per ounce to $1,003 per ounce, reflecting lower grades, movements in stockpiles and gold in process, and inflationary pressure. This year and next remains transitional ones, with increased waste stripping and underground development, accompanied by lower grades and movements of stockpiles.
Recovered grades are 10% lower year-on-year, with all operations reflecting lower grades except Siguiri, where grades were up 26% year-on-year, partly offset by a 6% drop in tons treated. All-in sustaining costs were 33%, or $331 per ounce higher at $1,333 per ounce on the back of higher cash costs and the planned higher CapEx on orebody investment and tailings compliance. COVID impacted all-in sustaining costs by about $54 per ounce, comprising an estimated $31 per ounce in production impacts, mainly at Obuasi, CVSA, and in Brazil, and an estimated net $23 per ounce in cost impacts. The balance sheet remains in good shape. Leverage improved to 0.37 times at the end of June from 0.73 times a year ago. Maintaining a flexible balance sheet with a target ratio of one times through the cycle remains our priority.
The higher net debt over the end of 2020, at $850 million, reflects the free cash outflow for the first half, as well as the $197 million dividends paid in March. Liquidity remains strong and continues to provide good flexibility in a volatile climate. Cash is close to $1.1 billion at the end of June, with almost $500 million of Kibali cash still locked up and excluded from this balance. We also retain our undrawn $1.4 billion revolver. The continuing suspension of mining operations at Obuasi while sustaining and growth CapEx continues, will impact free cash flow for the second half. We have revised our guidance for 2021, necessitated by the Obuasi suspension, cost pressures from lower than planned production performances, and additional unplanned CapEx in Brazil.
With regards to inflation, we have been closely monitoring inflationary pressures across our supply chain and specifically key strategic commodities in an attempt to minimize the impact on our cost profile. Existing contractual controls and higher inventory levels have helped dampen inflationary effects in the first half. Inflation started to negatively impact our cost in the latter part of the second quarter as inventories were consumed and pricing on several commodities accelerated upward. Several categories of spend have come under pressure due to supply constraints and increased global demand, and we anticipate this trend will continue into the second half of the year as well as next year. The tailings conversion program in Brazil, taking place amidst COVID-19 challenges, is increasing competition for skills and engineering resources and has resulted in an increase in the investment planned to complete the conversion by the legal deadlines.
We estimate that Brazil's production outlook for the remainder of the year will be affected by an estimated 15,000-20,000 ounces as a result of the skills shortage affecting the completion of these conversion efforts. CapEx to complete the program is now estimated at about $120 million-$130 million, an increase of $50 million from previously reported. Due to the current suspension of mining activities at Obuasi, the company withdrew production and cost guidance related to Obuasi on 26 May. Obuasi's estimated contribution to the company's 2021 guidance was production of 300,000-350,000 ounces at an estimated total cash cost of $660-$710 per ounce, and an estimated all-in sustaining cost of $950-$1,050 per ounce. The mine produced 85,000 ounces in the first half of the year at a total cash cost of $999 per ounce and an all-in sustaining cost of $1,316 per ounce.
Since our current estimate is that mining activities at Obuasi will likely only resume towards the end of 2021, any anticipated production contribution for the remainder of the year has been removed from the revised guidance. Group guidance has been revised to 2.45 million-2.6 million ounces of production at a cash cost of $890-$950 per ounce, all-in sustaining cost of $1,240-$1,340 per ounce, and capital expenditure of $1.03 billion-$1.19 billion. In addition to Obuasi, further production adjustments were required for the anticipated Brazil tailings conversion impacts, as well as other delays in production outputs, notably at Iduapriem due to a revised mine schedule and at Tropicana due to the recent pit wall failure.
Cash costs are impacted by Obuasi by $10-$20 per ounce and by $80-$90 per ounce from the lower than planned grade and operational performance, higher oil prices, and emerging inflationary pressures. All-in sustaining costs have been revised by the cash cost impacts and an additional $10 per ounce reflecting further Obuasi impacts relating to all-in sustaining costs. CapEx for Obuasi for the remainder of the year is included in the revised guidance, given the continuation of work related to the redevelopment project. Obuasi is expected to incur $35 million-$45 million of sustaining CapEx and $70 million-$80 million of non-sustaining CapEx during the remainder of the year. Overall, revised total CapEx guidance is mainly impacted by the additional $50 million related to the Brazil tailings transition.
The split between sustaining and non-sustaining CapEx has been adjusted because of the Tropicana Havana cutback classification as a growth project from 1 July onwards. Other operating expenses now include $50 million for care and maintenance expenditure at Obuasi following the suspension of mining activities. Finally, the impact of Obuasi on next year's guidance will be considered once the mine-wide review is complete and the ramp-up plan has been finalized. With that, I will now hand over to Sicelo to cover the Africa operations.
Thanks, Ian. I will be providing an update on the Africa region's first half performance and give a progress update on our reinvestment strategies. Looking at our first half performance in detail, on the safety front, I am pleased to report that Geita and Siguiri remain injury-free during the period. Globally, our operations continue to see both the direct and indirect impacts of COVID. Our top priority is and will remain the health and safety of our workforce and host communities. Against the backdrop of some reduced operational flexibility, COVID-19 challenges, and the Obuasi stoppage, the region produced 717,000 ounces at an all-in sustaining cost of $1,157 an ounce. This temporary reduction in mining flexibility was expected given limited mining fronts during our reinvestment to access higher grade ore sources after the depletion of Nyamulilima Open Pit at Geita and Cut 1 at Iduapriem last year.
As a result, we have drawn on stockpiles this year to maintain production levels, placing temporary upward pressure on costs year-on-year. Looking at the assets in more detail and starting with Geita. Production at Geita was exclusively from Star and Comet and Nyankanga underground operations, supplemented by stockpiles. That's versus last year when we still had the benefit of the high-grade Nyankanga ore. Geita's transition will see both the new Nyamulilima Open Pit and Geita Hill underground operations fully ramped up in the second half of next year. Kibali recorded another solid performance coming in at 177,000 ounces, aligned to the same period in 2020. With higher cost resulting from increased waste stripping and stockpile utilization. We continue to see improving results from Siguiri with 19% increase in production year-on-year.
This means we are seeing the investment in the comminution plant yielding the desired outcome as we continue further to improve performance metrics. At Iduapriem, performance was impacted by lower grades after the depletion of Cut 1 last year, as we strip Cut 2 and draw down on stockpiles. After a record 274,000 ounces of production last year, Iduapriem is now stripping Block 7 and 8 to create a further decade of mine life. Obuasi contributed 85,000 ounces before the suspension, which Graham will cover in more detail. Let's look at the reinvestment strategies in more detail, again, starting with Geita. Geita is undertaking two key projects. Firstly, the 1 million ounce+ Nyamulilima Open Pit and the Geita Hill Underground Project.
These will slot in with the already established Nyankanga and Star and Comet underground operations, creating a combination that will sustain a production rate above 500,000 ounces per annum once these two new additions reach steady state in the second half of next year. Starting with the Nyamulilima Open Pit, we have received all the mining and environmental permits. We have also been able to execute open pit operations ahead of schedule based on excellent planning and preparations by the site team. We are scheduled to start hauling ore this month and will be in the main ore body in under a year. We are aiming at an average mining rate of 200,000 ore tons a month at 3 g per ton, greatly offsetting the loss of Nyankanga. We believe there is more to come.
To this end, we have extended exploration beyond the current pit to other targets in the Nyamulilima district, where we expect to declare further reserves soon. Geita Hill Underground is just over one third of the way into an 18-month establishment phase. We expect it to reach full steady state production in the second half of 2022, stably mining between 60,000 -7 0,000 tons of ore a month from this long life deposit. We also expect to declare a maiden reserve from Geita Hill at the end of this year. In summary, by around this time next year, Geita will comprise three underground mines and an open pit mine, all at steady state, filling the plant with fresh ore. In the short term, as planned, production is lower and costs higher than recent years, as we focus on establishing high-grade ore access across the operation.
In the medium to long term, both cost and production will improve as the two new mining fronts create sufficient mining flexibility to maintain Geita's position as a tier one asset with long life of mine. Siguiri continues to improve. Production was up 19% compared to the first half of last year, with a consequent improvement in all-in sustaining costs. If we look at the critical parameters of the comminution plant, which we completed last year, we are pleased to see recovery maintained at above 80% threshold. We expect further improvements into this year and next year as we bring in Block 2 higher-grade oxide material. We are also happy to announce that the Block 2 project, which is a satellite source approximately 40 km away from the plant, officially kicked off. In fact, we expect to start hauling ore to Block 1 in the next few days.
In summary, for Siguiri, with the plant primarily stabilized and Block 2 operations ramped up, the focus for this site will shift to increasing life of mine. Accordingly, we have intensified our exploration efforts as we turn our focus to the remaining high potential lease area, particularly the Block 3. As previously communicated, Iduapriem's reinvestments fall into two areas. The first is the waste stripping in Block 7 and 8, with Cut 2 expected to reach ore in early 2022. Our mining strategy is to sequence the waste stripping such that delivery of high-grade ore is consistent throughout the life of mine. Cut 2 will deliver ore from 2022 onwards, while Cut 5 and Cut 6 will follow two years later. To support this stripping program, we have signed a new five-year mining contract to extract efficiencies and support delivery.
The second investment area is a new TSF to match the extended mine life, which has been approved by the regulator and is expected to be operational by mid-2023. This TSF will be developed in phases to optimize cash flow, extending capacity as needed to coincide with the life of mine. In summary, we are confident that next year, Iduapriem will be back to the 230,000-250,000 ounces production level ranges going forward. In conclusion, we are working through this transition phase as we execute on our reinvestment projects. In the short term, we are incurring some transitionary costs due to lower grades and higher stockpile utilization. Looking at the second half, we will continue to focus on executing Nyamulilima Open Pit and Geita Hill underground projects. At Siguiri, we will see continued improvements in the plant performance as we bring Block 2 open pit to account.
At Iduapriem, we expect to access Cut 2 or in early 2022 as we start construction of the new TSF. At Kibali, we will continue to work closely with Barrick to support operational performance and to secure cash repatriation. Finally, we are focused on executing on our strategy and improving our overall performance. We will stay the course to unlock the potential of all of our assets. I'll hand over to my colleague, Ludwig, who will take us through the international portfolio.
Thanks, Sicelo, and good day everyone. The international operations faced a number of headwinds in the first six months as COVID-19 continued to impact our operations. Brazil, Argentina, and Colombia were among the countries most impacted by the pandemic. This is reflected in the fact that two in five employees in Brazil have so far tested positive for the virus, contributing to the Brazilian operations losing over 40,000 workdays to absenteeism in 2021. The prolonged lockdown in Argentina continued to restrict the movement of supervisory staff from other provinces, which has constrained mining and gold production. In Western Australia, lockdowns and border closures resulted in a shortage of skilled mining operators and mining staff. This has intensified competition for mining skills and increased the staff turnover on our sites. This, in turn, has resulted in new workers entering the industry, which is having a near-term impact on productivity and costs.
Our COVID-19 mitigation protocols are firmly in place, and we remain committed to ensuring the well-being and safety of our employees and surrounding communities. We're supporting vaccine rollouts and expect this to gain momentum as the year progresses. By way of example, I'm pleased to report that around 50% of our staff in Brazil have received at least one vaccination. Pandemic or no pandemic, our Brazil operations face tight regulatory deadlines to transition to dry stack tailings. This has required the installation of a new filter and water plant treatment plants and the mobilization of an additional around 1,800 employees and contractors to our sites, all with the necessary COVID protocols and safety procedures. Accelerating inflation, scope changes, skills shortages, and supply chain disruptions have added to these costs in 2021.
It also made it necessary to restrict plant throughput at certain of our operations to ensure we remain within permitted limits for tailings storage. I'm pleased to report that all operations are on track to complete their transition in early 2022. In summary, the international operations saw marginally improved gold production compared to Q1, but lower year-on-year. Starting with the Americas, production was lower year-on-year on reduced output in Argentina and Brazil. The lower production and additional capital expenditure of $244 per ounce, mainly due to the tailings compliance and additional development and exploration drilling, pushed costs higher. AGA Mineração reported similar production year-on-year, but with an additional $258 per ounce tailings investment. Serra Grande's production was impacted by the high turnover of critical production staff, together with lower development rates, which restricted access to higher-grade ore.
We have since recruited extensive critical skills and are seeing early signs of improvement. Capital expenditure, which was $441 an ounce higher than the previous year, reflects the extra cost for the dry tailings facilities. In Argentina, Cerro Vanguardia performance reflects the impact of ongoing travel restrictions on underground and open-pit mining. Mine plans have been revised to concentrate mining ore to fill the plant, supplemented with lower grade stockpiled material. Shifting to Australia, production was lower than the previous year, which reflects the planned decrease of around 20,000 ounces at Tropicana. Gold production at Tropicana includes a contribution from the new Boston Shaker underground mine, which ramped up to 182,000 tons of ore mined during the quarter, relative to 140,000 tons in Q1.
Unit costs were impacted by lower production and strengthening of the Australian dollar, but these should normalize as underground production increases going forward. Looking ahead, we experienced a wall failure in the Boston Shaker open pit in early June. This had no reserve impact, but will defer ore delivery into the next year, given that the open pit is currently the primary fresh ore source. Despite achieving all the operating metrics and an unfavorable grade reconciliation at Sunrise Dam persisted during the quarter. The negative mine call factor can be ascribed to a specific area in the Vogue ore body mined over the last eight months, and we should see improvement as we start to mine other ore bodies. all-in sustaining costs for the period was consequently elevated at Sunrise Dam, which has a relatively high fixed cost base.
The unit costs are expected to normalize in the subsequent years as production increases and reconciliations improve. Investment in exploration drilling continues to target the recently discovered Frankie ore body within the Western Shear ramps and extensions to the Vogue and the Carey Shear ore bodies. The new higher grade Golden Delicious open pit satellite deposit at Sunrise Dam achieved commercial production towards the end of the quarter, on time and within cost budget. First ore was delivered to the processing plant in Q2 and as volumes increase from Q3 onwards, Golden Delicious ore will displace marginal stockpiles for the remainder of the year. It will continue displacing marginal stockpiles well into 2023. Golden Delicious is on track to achieve commercial production towards the end of the quarter and contribute around 3 million tons of material at a grade of 1.5 g per ton.
Staying with Sunrise Dam, we've continued to invest in the exploration drilling, focusing on the recently discovered Frankie ore body, along with extensions to Vogue and the Carey Shear ore bodies. These results are encouraging, and we delivered around 800,000 ounces of resource growth during the last quarter alone. Frankie, which is shown on this slide, is close to both surface and current infrastructure. We're drilling it aggressively, and we expect to bring a small parcel of high-grade ore into the plan by year end. Frankie is open in all directions and will provide additional mining front to increase flexibility. There's also an option to mine higher grade remnant ore from the Western Shear zone. The Boston Shaker underground mine at Tropicana continues to ramp up production and is expected to reach full capacity later this year.
The trade-off study to assess the optimal method of mining the deeper ore in the Havana ore body has determined that the final cutback of the Havana pit will provide superior returns to an early underground strategy. A new underground drill drive has also been developed off the Boston Shaker decline to provide additional platforms to drill the northern extent and down dip below the Tropicana pit. Early results are promising and suggest the potential for additional underground mining areas. We will continue to invest in the exploration and look for opportunities to develop new underground mines below the Havana and the Havana South pits, where mineralization remains open at depth. Despite the operational challenges noted earlier, Cuiabá continued to invest in drilling and development to accelerate the grade control drilling and access the deeper ore body below the 20 level.
I'm pleased to report that the total development meters have continued to increase year- on- year, with excellent progress in the priority headings and ramps. Key development ends have advanced by a record 785 m for the year to date, compared to below 600 m in 2020. This is helping to create additional drilling positions and results in the promising results from the deeper Serrotinho ore body and the shallow VQZ Quartz Vein. Drilling has also continued in the newly discovered Berta ore body, which is situated within the existing mining license. In summary, it's likely that many of the current operational challenges will persist for the remainder of the year. However, we have plans in place to mitigate the impacts on our operations.
The operational focus for the second half of 2021 remains unchanged and is to maximize the value by successfully converting the Brazilian tailings facility to dry stacking, drive operational excellence to improve cost, capital and efficiencies, continuing to invest in drilling and development to improve mineral resource confidence and grow near-term ore reserves to create flexibility in our operations. Progress new low-cost projects in Colombia and Nevada. Strengthening our focus on ESG by developing concept studies to reduce carbon footprint and limit exposure to climate-related risk. With that, I'll hand over to Graham to cover Obuasi.
Thank you, Ludwig. Today I'll comment briefly on construction progress at Obuasi and spend a bit more time on the outlook following the tragic fatal incident on 18th of May. Year-on-year, gold production for the first half increased as the project progressed with the phase II ramp up. all-in sustaining costs were $1,316 an ounce on relatively low production. Phase II construction was completed, also on budget. I'll cover this in the next slide with a few photographs. Phase III establishment has commenced. This runs through to 2023 and involves the refurbishment of the KMS shaft, a new ventilation shaft, pump stations and other infrastructure. The purpose is to service the mine as the center of production moves north and deeper into Blocks 9, 10, and 11. The tragic incident in May has severely curtailed the phase II production ramp up.
Mining operations were immediately suspended. As we were in ramp up, ROM stocks were limited and were soon exhausted. Minimal production is being maintained with the processing of reclaimed residues and the retreatment of some tailings. We are focused on understanding and dealing with the current issues and resuming the ramp up as soon as possible. This is a setback. Nevertheless, Obuasi remains a high grade, low cost and long life operation. The final elements of phase II construction were completed last quarter, including the paste fill plant, the GCVS ventilation shaft and fans, the underground fiber network, a new high voltage switch room and power factor correction equipment, the Adansi rock winder, and surface drainage works. In regard to the fall of ground incident, the incident occurred in the narrow hanging wall structure of Block 8, shown in this slide.
Block 8 is one of several blocks that make up the Obuasi resource, and with Sansu is the main source of mining for this year. The hanging wall lode is narrow and is being mined longitudinally compared with the main lodes of Block 8, which are being mined transversely. Putting things in perspective, Obuasi's reserve is 8.7 million ounces. Block 8 contains 1.5 million ounces or approximately 20% of the reserve. The hanging wall is a small structure within Block 8, containing about 130,000 ounces. Sansu contains about 500,000 ounces or about 6% of the reserve. Turning to the approach to the resumption of mining. The investigation identified a range of factors that contributed to the incident. These include the localized geology, the geotechnical structures, and historical mining and backfill in the vicinity of the sill pillar failure.
A cause was the unexpected settlement of backfill in an old stope immediately below the sill pillar footwall drive. The pillar failed between two carbonaceous shears, which are narrow areas of very weak rock mass. Considering all the factors that contributed to the incident, and due to the nature of the incident in a geotechnically designed structure, we are undertaking a detailed review of all underground work areas. We have resumed work in the Obuasi Deeps decline and in several development headings. We have also resumed diamond drilling, service functions, and underground construction activities. We are working with Australian mining consultants who have been engaged to undertake an independent review of the mine design, schedule, and the ground management plan. This work has commenced with Block 8 and is progressing well.
The review will move to Sansu and then to Blocks 9, 10, and 11, which will be mined from 2023/2024. The review of Block 8 is expected to be completed during this quarter. Following the implementation of the recommendations of the review and the incident investigation recommendations, mining is expected to resume toward the end of the year. We are targeting ramp up to 4,000 ton per day, by the middle of 2022. I should emphasize that the schedule for this remains work in progress, and we'll provide further updates as the work progresses. With that, I'll hand over to Tim to cover exploration. Thank you.
Thanks, Graham. Our generative exploration programs were active across the portfolio, and we saw a significant increase in drilling meters compared to the same period in 2020. Positive drill results were received from Butcher Well in Western Australia and in Nevada with the study work initiated for the Silicon project and also at the New Merlin target near Silicon. Our mine site exploration programs continued their focused drilling programs while, targeting increased mine life with ore reserve addition while balancing against mobilization delays and reduced crew availability in some areas related to COVID restrictions. In the past few years, we've consistently grown ore reserves in our mine site portfolio. Our current three-year focused investment program for additional mine site drilling and ore reserve development will continue to preserve these gains and provide a stable ore reserve base for the company.
We're expecting another good year for ore reserve replacement in 2021 with mine sites that have been allocated some of the larger focused drilling investments such as Geita and Sunrise Dam forecast to lead the way. The early results at both sites have been good. We have an excellent record for discoveries and ore reserve conversion guided by our E4V exploration management system, with 19.2 million ounces added to ore reserve within the current portfolio in the last five years. This averages 3.8 million ounces a year at an all-in cost of just over $27 an ounce. On July 13th, we submitted a non-binding cash proposal for the remaining 80.5% interest in Corvus Gold after conducting a detailed due diligence of their assets.
This proposal is aligned with our own organic growth prospects to bolster our own organically developed exploration portfolio by combining neighboring properties with clear synergies. We see this district as one of the largest new gold districts identified in Nevada in the past 15 years. It will allow us, over the medium and longer term, to create meaningful, low-cost production base in Nevada. Corvus has completed PEA studies for its North Bullfrog and Mother Lode deposits, which have a combined 4.2 million ounces of gold in measured, indicated, and inferred mineral resources in the world's premier mining jurisdiction. Production could start in the medium-term from North Bullfrog before growing to one of our larger contributing jurisdictions by the end of the decade, bringing low-cost production in the medium to long term from our own exploration assets in the Mother Lode deposit.
Our own due diligence suggests these deposits will be mined initially as open pits. They will be processed using heap leaching and gravity recovery where applicable. Sulfide processing and underground mining could be evaluated in the longer term. We see direct synergies from economies of scale and integrated infrastructure over the enlarged district, and a combination would also allow for a streamlined engagement with federal, state, and local shareholders to advance the sustainability goals and other district benefits. This proposal is aligned with our strategy of growing ore reserves and adding low-cost and low-risk production opportunities. We're excited by this opportunity, and we're confident that our proposal represents compelling value to Corvus' shareholders. I'll hand back now to Christine to conclude. Thank you.
Thanks, Tim. It was a challenging quarter, but the strategy outlined earlier this year remains intact. At its core lies a disciplined approach to capital allocation and a commitment to a strong balance sheet to mitigate volatility. We remain committed to our investment to achieve growth, first, through low risk, high return brownfield options. Converting more of our endowment into reserve is key, and we'll see steadily declining costs over the coming years as our investments bear fruit. Our project pipeline underpins our production plans for the long term. Our capital allocation framework guides us in ensuring our investments provide returns well above our cost of capital, and our commitment to strong and improving ESG provides us the social license to operate across our base. We have our work cut out for us.
Keeping our people safe and well, and supporting our communities through this incredibly difficult time is a priority. There is no getting around the fact that this was a tough first half. We're committed to turning that around. We're driving operational excellence initiatives across the portfolio. A particular emphasis will be placed on operating and capital efficiencies, and we'll continue to look for appropriate capital savings. At Obuasi, we have two main aims. First, to finish the review and to safely bring this mine back to production. Second, to continue our work on the project so that when we do get back up and running, the ramp-up is as smooth as possible.
As you all know, Alberto Calderon will join as Chief Executive Officer at the start of next month. Many of you will know Alberto from his time at BHP, where he held several high-profile positions over a number of years, including line responsibility for its nickel and aluminum businesses. Prior to that, he ran Cerrejón, which is Colombia's biggest mining operation. Most recently, Alberto was Chief Executive Officer of Orica, the world's largest commercial explosives maker and a large multinational business servicing the global mining industry. Both myself and the rest of the executive team are looking forward to this new chapter for AngloGold, with Alberto as Chief Executive Officer . With that, I'd like to open the call for questions.
For the participants that dialed in, if you would like to ask a question, please press star then one on your touch-tone phone. If you decide to withdraw the question, please press star then two. If you would like to ask a question, please press star then one. Just a reminder for the participants on the webcast, if you would like to ask a question, please type your questions in the webcast question box. The first question comes from Patrick Mann from Bank of America. Please go ahead, Patrick.
Thanks very much. I just wanted to ask, looking at your revised guidance for the full year, excluding Obuasi, it's about a 20% increase on the rest of the assets, kind of half on half. Could you maybe give us a bit of guidance about where you're expecting to see the improvements, or is it broadly across the board? Thanks. That's my first question.
Yeah. Thanks for the question, Patrick. I think it's fair to say that we are expecting improvements across the portfolio. Like we said, we are expecting both improvements in production and grades, in particular coming through, in the second half of the year. As you know, our second half is more back-weighted. I think it's fair to say it's really across the portfolio. That's where we're actually expecting it to be. Of course Obuasi is removed from the second half guidance.
Okay. Thank you. Just more, if I may. In terms of the consolidation of Nevada, have you got any indicative timelines for us around the feasibility when we could maybe start to see more information around the potential of that region? Thanks.
Yeah. I think, Patrick, one step at a time. I think firstly, we will need to conclude the acquisition on Corvus, and then we'll be able to flesh out plans. I think certainly in terms of concluding the feasibility, and we'd hope to, if it's successfully concluded, get to production certainly in the medium term on Nevada. We'll flesh that out in future calls.
Okay. Thank you very much.
Thank you.
Thank you. The next question comes from Jared Hoover from RMB Morgan Stanley. Please go ahead, Jared.
Afternoon, team. Thanks for the call. A few questions from my side, please. I think you guys touched on it a bit earlier on the Southside call as well, but just coming back to Obuasi, the fill failure seems to obviously have been due to poor quality backfill in the historically mined areas. Can you just give me an indication of the percentage of the reserve that's sitting in historically mined areas? Do you have a ballpark number about what it might cost to supplement that backfill? I'll follow- up with a few more after this.
Thanks for the question. I'm going to hand over to Graham to answer your questions. Thanks, Jared.
Thanks, Christine. Thanks, Jared. At the time of the feasibility study and committing to the project, we were well aware that fill would become a key feature or was a required feature of the mine. That's why we've invested in a paste fill plant. Prior to that, fill used at Obuasi was rock fill and hydraulic fill with and without cement. It's a key feature of the ongoing mining process. The extent of old workings varies across the mine. It's not constant at all. Block 8 is one of the more intensively mined areas. The lower part of Block 8, however, is a new area. Sansu is an old mining area and their cemented rock fill is currently being used.
As we move to Block 9 and Block 10, the level of mining in those areas is much less. Then we get down to Block 11, which is a quite high grade, but deeper load. That's a new area untouched at this point. It varies across the operation. In terms of our approach going forward now, learning out of these incidents, it will be to test the quality of fill in that area through probe drilling, test for voids with further survey and downhole survey. Where needed, to supplement the fill in the old workings and establish stable mining conditions. That'll be part of the overall mining process. I don't expect that costs will be materially higher.
This will be an additional cost, but already the cost of ORD into those areas, the drill and blast of stoping, haulage, processing, and G&A costs all included in the cut-off grade. We're expecting costs to be more on the fringes, and therefore not have any material impact on reserve in Block 8, and certainly not in the rest of the mine.
Great.
Thanks, Jared.
Thanks for that. Thanks. Basically, it really just seems like there shouldn't be too much more OpEx, and it's really just a case of completing the review and timing getting pushed out. Is there potentially any more CapEx we can expect?
I'm not expecting any additional CapEx. From a construction point of view of the various facilities, no. However, because of the delay in the ramp-up, there is a move of some operating or stay-in-business capital into project growth capital. Ian might like to comment on that.
Yeah. Maybe to add that, Jared, yes, the CapEx, as Graham has mentioned, is still within the total overall CapEx budget. The allocation between sustaining and growth is slightly different. As you go through the various phases and running up to commercial production, you treat the ORD development as growth. As you then enter into commercial production, you then turn it into sustaining CapEx. With the delay now in phase II, more of the ORD development that would have fallen into the sustaining CapEx category remains in the growth CapEx category. It's not a reallocation, but just that's the way it works pre-commercial production, post-commercial production from an accounting perspective.
I think the second thing is with the delay now, some of the operational costs, because the manning standing still drops out to care and maintenance still being expensed, but it sits outside of the operating cost and cost of sale lines on the income statement.
Great. Thanks. That was very clear. Two more on Obuasi. I think you also mentioned that there was some carbonaceous material that contributed to the sill failure. If that carbonaceous material is prevalent throughout the entire mining area, would that be something considered as a structural problem for Obuasi?
That's a feature of the mine. It's associated with the mineralization. It's been dealt with over many years. What happened in this circumstance is when the support for the sill pillar was lost with the settlement of fill in the sill pillar footwall drive, the sill pillar failed between two carbonaceous shears. If that support was there, it wouldn't have failed. It's just the point at which the sill pillar failed.
Okay, great. You carved out FY 2021 guidance prior to when the sill failure happened. Would you be able to carve out what FY 2022 Obuasi metrics look like? Just to give us a steer on how we should adjust our guidance or adjust the guidance for next year.
Jared, a bit hard to tell at this point. I think better that we progress it with the work that we're doing, understand what the timing impact will be, and we'll get a better handle on that towards the end of this quarter, and we can report to that in the next set of results. A bit early to try and push that out into 2022. Our aim is to resume ramp up after we've commenced mining at the end of the year and get back to the planned production rate by the middle of next year.
Okay, good. I've just got one more question, and then I'll hand it back over. I think your revised guidance points to obviously, an improvement in grade across the existing portfolio. If I have a look at your cash cost waterfall chart, it seems to indicate that there are a few unplanned issues, causing lower grade, more stock by processing. Can you just give us a feel for some of the risks in your portfolio that you're most worried about that could potentially translate into unplanned lower grade and unplanned further stock by processing in the second half of the year? Thanks. I'll leave it there.
Thanks, Jared. I think in particular, what we have done in the guidance, like you say, is we've removed Obuasi's contribution, but what we did do is also adjust costs, production being the denominator, both for inflationary pressures as well as where we saw risk across our operations, or more risk than what we envisaged. I think just as an overlay, we are expecting production improvements as well as grade improvements over the entire portfolio, in the second half of the year. Quite significant improvements to actually come through. I think where we have anticipated some risk, I think certainly, and maybe Ludwig can talk to his area, has really been Sunrise Dam, where we saw some grade reconciliation issues. It was an issue in Q1. It has persisted in Q2. We have seen improvements coming through.
That's where we've had to make some risk adjustments, in the mine call factor. For Sunrise Dam at Tropicana, there was the pit wall failure, so there's some deferral of ounces that has been made in the plan. Likewise, in particular at Iduapriem, in Ghana, there was delayed access by about three months to Cut 2. There's been some deferral of ounces there by a whole quarter into next year. Those are sort of the main areas where there has been some risk adjustments, particularly, with respect to grades. I think maybe Ludwig can just talk to that, in his portfolio, and just give a flavor there for international. Sicelo can elaborate on that in Africa, in particular as relates to Iduapriem. Thanks.
Thanks, Christine. Thanks, Jared, for the question. I think Christine actually summarized it quite well. At Sunrise Dam, we've seen quarter-on-quarter, a 23% increase in improvement on the grade or the mine call factor. We have actually removed the previously positive mine call factor we built into our plans. We've removed that for the rest of the year. All the risks is basically built into the outlook for the year. Similar to Brazil, we have actually built in risk in our forecast for the year. Obviously, depending on the pandemic and how many people we can actually get back, and which is related to the vaccination rate and how we can drop our COVID protocols. That can vary. That could be positive as well, if we can actually see an improvement on our absenteeism. Thanks.
Sicelo?
Yeah. Thanks, Jared. I also think Christine summarized it well. We have factored in the risks in our outlook for this year as well as going forward. Particularly at Geita, we will be seeing flexibility coming back as we begin to haul off from Nyamulilima starting now in August. That will minimize the reliance on stockpiles. The same at Siguiri as well with the Block 2 also coming in now in Q3. That's going to help to improve on the grades. The impact at Iduapriem is really weighted in the second half of the year, because of the access delay for about three months in Cut 2. However, that impact has also been factored into our outlook. Thanks.
Thank you. I'd like to hand over to Stewart for questions from the webcast.
Thanks very much, Claudia. The first question is from Catherine Cunningham at JPMorgan Chase. The first is, you mentioned 24% of the workforce has received at least one vaccine and 9% fully vaccinated, mostly from Siguiri and Obuasi. Which regions have the lowest vaccinations? I would say that Tanzania is a sort of clear laggard in that regard so far. That is improving now. I think from really a standing start in the last few weeks. First shipments of vaccine have arrived this week, which is a huge improvement. The president was actually vaccinated on live TV. We hope to see some momentum building there pretty soon. The other thing is that so far in Australia, not that vaccination is a big issue in Australia. The rates are typically lower than elsewhere in our portfolio. We expect that to start ticking up as well.
The other thing just to note is that Latin America in particular is building momentum, and you can see some of that coming through. The next from Catherine as well is, 42,000 ounces production impact in H1. What has the impact been in July, August? I think a bit early for August, but maybe I'll just hand over to Ludwig to talk a little bit about what he's seen in July and then to Sicelo.
Yeah, thanks, Catherine, for that question. Look, I don't have a number on that yet, but what we've seen in Brazil is less absenteeism. Where we previously saw up to 450 people being absent per day, we've seen anything between 20 - 80 per day in the last month. That's a huge improvement. It's most probably on the back of the vaccines and also as things stabilize in Brazil. Is there a follow-up question?
I think we'll just--
Stewart?
Just quickly, what you're seeing in continental Africa at the moment is you are seeing an uptick in COVID-19 cases generally across the continent. I think that is largely to do with the Delta. Still overwhelmingly asymptomatic at the moment. Yeah, a little bit early to tell yet, but certainly some cases ticking up, but muted impacts so far. Catherine, Sorry, Christine, you were going to add something.
I just wanted to say that with COVID-19, it's also the second order or the indirect impacts, I think that we're still seeing and expect that to prevail. I think, like we said, 42,000 ounces in production. Of that, I think 27,000 ounces related to Obuasi, the balance related to CVSA as well as Brazil. I think in CVSA in particular, it's still operating at the 60%-80% production capacity level. I think we will expect that to prevail sort of coming through because we haven't really seen that improvement coming through. In Brazil, like Ludwig said, that is abating, but it still remains a risk. On costs, you've got that impact coming through. We've given you about $23 an ounce, which actually relates to costs. That's a scientific sort of calculation, best estimated.
It's all those indirect impacts that it is having on productivity, both in Brazil and Australia, which we are trying to mitigate. I think Ludwig spoke to the levels of absenteeism. I think where there are restrictions, specifically on movements between provinces and also the impact on expat rotation, where it is harder to do and people are not willing to sort of rotate. They'd rather stay in their home province or in their home country. It does actually cause that inflationary pressure to come through because you're having to pay more to either attract those people or retain those people or the skills that you have. It's really the indirect impacts of COVID that does remain a risk. We're trying our best through the operational excellence initiatives to mitigate that risk as well.
You'll notice that in the guidance that we put out, COVID-19 does remain a caveat for the guidance.
Thanks very much, Christine. The third part of Catherine's question is, in Australia and Brazil, where you cite wage pressure, what is labor as a percentage of costs in those regions, Ian?
To give you a sense, in Australia, the labor component is approximately 20% of the total costs, and in Brazil, the labor component approximates around the 35% level of your total costs.
Thanks.
Yeah, I think just to contextualize it further, the increases and where we're seeing the pressures, it's not across the entire labor category. It's a percentage of that 20% or 30% cost category. It's really on the critical skills, the technical skills, where those critical shortages are applying, and that's where we're having to put retention incentives and wage increases in place.
Thanks very much, Christine. Next one from Ahmad Hakim from Oasis says, "Regarding your revised guidance, what level of cash cost per ounce and production do you expect to realistically achieve in H2 with inflationary pressure still expected to persist, as well as the Delta variant possibly continuing to impact production?
I think we've put out the guidance there. We're comfortable with the range and that it's taken into account the risks that we actually see at the moment. I think COVID, like I said, is excluded from that we've put out. I think, when it comes to what we have accounted for in the guidance is inflation and as we're experiencing it currently. I think, in particular, we have revised the cost guidance to take that into account. You'll notice that we have increased the oil price assumption and exchange rate assumptions in the outlook that we've actually provided. Like I said, it's our best estimate. The iron ore industry is competing for critical skills, and so the cost, as we've foreseen it, is certainly factored in more on the labor side.
What we are also seeing is that there's the increase in steel prices. Generally, the increase in commodity prices, that actually does impact the grinding media, the reagents, spares, tire costs as well. Then there's the increase in logistics costs. So how we're trying to counter that is, yes, we understand we, in certain instances, are a price taker, but how we're looking at mitigating it is through our operational excellence initiatives across the various regions that we do operate in.
Thanks very much.
Best estimates in the numbers.
Thanks very much, Christine. The next one from Tanya Jakusconek from Scotiabank. Tanya says, "Can you provide more clarity where you're seeing inflation? What percentage is in labor? What is for explosive steel, fuel, cyanide, et cetera? Are you seeing inflation in transportation, and are you seeing the same 5%-6% inflation similar to your peers?" Ian?
Yeah.
Christine has alluded already to that and what's our pressures on the consumable side. Just to give you a little bit more sense of that. With regards to steel pricing, it will affect grinding media and underground support. On grinding media, depending on which continent we are operating, you can see anything. We're expecting to see increases anything from between 10% up to 25%. On underground support side, we are expecting to see increases anything from 5%-15%. On the explosive side, up to 8% increases in explosives. To give you a sense, ammonia input pricing for explosives has increased as much as up to 70% in the first half of 2021, which will then start to come through on the explosive pricing. With regards to spares, increases up to 6%, higher costs increases up to 12%.
Then, as Christine alluded to, a significant amount of logistical issues on the supply chain. Globally, port congestion and shortage of containers is coming through. We're expecting to see longer lead times, especially on spares and the availability thereof. Then also other very specific country impacts on the supply chain, regulatory approvals and delays at ports in certain countries. Then specifically to South Africa, the recent civil unrest that we've experienced is putting some pressure on the ports. It's an important port for us for our African operations. I hope that gives a little bit more flavor on the consumable side.
Thanks very much, Ian. I'm going to go back to the phone line. Claudia, if you don't mind, I think Adrian Hammond is next up in the queue.
Yes, he is. Thank you, sir. The next question comes from Adrian Hammond from SBG Securities. Please go ahead, Adrian.
Good afternoon, everyone. Thanks for entertaining all our questions. Clearly a tough set of results. I have quite a few of my own. I'll be quite candid, if I may. Firstly, I mean, you acknowledged that you could do better. Perhaps you can expand where mistakes were made in H1 apart from the issues at Obuasi. Where does accountability sit? Certainly, your share price is reflecting that things aren't right. Secondly, on Obuasi, are you not maybe perhaps throwing good money after bad with this asset? Given that since inception, you bought this thing for $600 million. You haven't ever generated a free cash flow profit except for a couple of million dollars in 2010 and 2011. Accrued losses now total $2 billion. You've just convinced your shareholders that pursuing this mine with another $500 million investment is the right way to go.
You now have another unfortunate event, which has delayed this further out. Is there not perhaps a point where you stop the cash burn for this asset, please? I have a few more observations. Thanks.
Thanks for those questions, Adrian, and like we say, we expect more to come. I think, in particular, your observations regarding what did we underestimate, what did we get wrong in the first half? I think let's just contextualize it. I think, certainly, the first half is always softer compared to the second half, and this is no different from what we've seen in the past. What we have guided to for this year and next year is that these are transition years. In particular, contextualizing it is we are in reinvestment years. There are a number of big projects that we're doing across a number of the mines in the portfolio. When you look at Geita in Tanzania, we've got two big projects there. We've actually got the Geita Hill Underground, and we've got the Nyamulilima Open Pit. Both of them are actually transitioning.
We've got the Tropicana cutback that we're doing after Boston Shaker Underground was actually completed late last year. Clearly that's also ramping up. At Iduapriem, we've got the Cut 2, and so that's progressing according to plan, but there was a delay in access and there are some uncontrollable factors there. I think particularly, there were some community issues , and Sicelo can talk more to that. Of course, Sunrise Dam, these are great reconciliation issues. It's ore body issues. I think from what you've heard from both Sicelo and Ludwig earlier, I think see these as transitory. It's a timing issue. First half compared to second half, you will actually see an improvement. It is a two-year transition strategy.
It's a reinvestment strategy. One could say that in the past we could have done some of these reinvestment projects earlier, but it is where it is. The mines are at a point where they are constrained. We do actually have to progress the reinvestment strategy to have improved flexibility, improved grades, so that we also can sustain production there going forward. Of course, as a management team, we hold ourselves fully accountable for delivering on the reinvestment strategy. It's important that we're not measured on a quarter or a half year. We've outlined the plans to the market. We are on our way to delivering on those plans. We need to be held accountable for what we actually do deliver, and the targets that we've actually put out. Very clear on that.
As relates to Obuasi, this is a hurdle in a long race. We comfortable that the long-term value proposition of Obuasi remains intact. This is at least a 25-year mine. There's been a tragic incident, and we have voluntarily suspended the mine, and it's absolutely appropriate that the investigation is being done, and that we cautious about, firstly, the review needs to be completed, and we need to be cautious about how we actually advance and progress the plan for the mining. Graham has actually spoken to that. It's important that we ensure that this does not happen again. Where you say good money after bad, I think bear in mind, Obuasi, at the beginning of this year, was already behind with its ore reserve development. What this does allow us to do is to catch up on the ore reserve development.
When the mine does actually commence production, we've got adequate ore reserves there to complete or to get to the ramp-up levels. We spoke to be aiming for Q4, the back end of this year, to be able to get to production and ramp up targeted to the same phase II ramp-up levels by mid-next year. These are not switches that one turns on and off. These are big mines and big ore bodies that we're actually dealing with. This has happened in a portion of Block 8, we're really being responsible about how we'll be looking to advance the mine plan there.
Thanks, Christine. It ties up nicely that answering to my next question, which is to look more long-term. You recently held an investor day with an upside to 3.6 million ounces by 2025. There's been a lot of changes since then. Is that number still intact? Secondly, is the board still aligned with your strategy that you gave it at the Investor Day?
Yeah.
With a bigger company with a larger CapEx spend, or is it perhaps maybe not the route to take, but a smaller business with a lower CapEx spend is something that you need to consider?
Absolutely, the board is fully behind the strategy and the plans that we actually put out to the market at Capital Markets Day. This was all subject to board approval. Both management needs to execute, but the board is actually fully behind us in terms of the strategy. Absolutely. The Capital Markets Day, clearly, we have put out guidance. It's an indicative outlook that we've put out. It is a wide range, that did account for volatility. I think certainly, as I've said, Obuasi, it's a core asset in our portfolio. There is a setback, and so we really see this as a timing issue in terms of getting to the ramp-up, and hence we've said that we'll be able to give you firmer guidance on 2022 once we've got clarity on the ramp-up plan.
That we'll be able to give you certainly by year-end. We're still comfortable with the indicative outlook that we've put out there. Of course, what we did say, the caveats to that is subject to investment decisions that need to be made and once feasibility studies have been completed, and those pertain particularly to Gramalote and to Quebradona. What is not included in those plans or in the indicative outlook rather, is the Corvus acquisition. I think we'll need to, depending on where we're at, no investment decisions have been made at this point, so we'll be clearer on that as we move forward and we'd be in a position to do so.
Just on that, Christine, Corvus Gold, do you think could be replacement of one of your other projects?
Like I said, no investment decisions have been made. What we're very clear is on our capital allocation framework. The fact that all of these projects would be self-funded. I think in particular, at this stage, we're keeping all options open. In our long-term plan, we've certainly catered for funding Gramalote as well as Quebradona. These projects are phased and staggered. Gramalote in particular is a 2.5-year build period. We said the feasibility study expected to be completed by the end of Q2 next year. Gramalote, we're still waiting for the environmental permit and the mining license. No investment decision will be made until we have those critical permits as well. That is a four-year build period, and the spend is back ended to the last two years. As regards Corvus, that we've accumulated cash on the balance sheet. We've got $1 billion in cash.
We'll be able to fund Corvus, but at this stage, really keeping options open as to when investment decisions are made.
Thanks, Christine.
Thank you.
Thanks, Adrian.
Thank you. The next question comes from Leroy Mnguni from HSBC. Please go ahead, Leroy.
Good afternoon, guys. Thanks for the opportunity. Most of my questions have been asked. I've got two more. You mentioned that on Geita Hill, you're expecting to declare a maiden reserve there towards the end of the year. Are there any other areas in your portfolio that you're quite confident on that you may be declaring additional reserves? My second question is, Block 8 at Obuasi, you said is about 20% of the reserves. Could you maybe give us an indication of what percentage of your production out of Obuasi was initially planned to come out of Block 8 over the next three years or so?
Thanks for those questions, Leroy. Tim did actually speak to 3.5 million ounces is what we're looking to add to our reserves for this year. Tim, do you want to actually talk to other areas in addition to Geita Hill? Graham , if you can please handle the Block 8 and percentage of production that we envisaged getting from there. Thanks.
Yeah. Thank you. That's a good question. When you take a look at Geita, both Geita Hill is a new reserve, but we also expect to see additions coming from Nyamulilima. An important expansion will be coming with Frankie at Sunrise Dam, which Ludwig spoke to earlier. Then we will continue to see other gains, really across the portfolio, in Africa, Argentina and other gains in Brazil. The portfolio is going to provide a 3.5 million ounce ore reserve gain this year, which is above depletion. That's our forecast at this time.
Thank you, Tim. Graham?
Thanks, Christine. Thanks, Leroy. In terms of Block 8, yes, 20% of reserves. Over the first two years of mine production, the production areas were Block 8 and Sansu. Block 8 represents around two-thirds of that production, for 2021 and for 2022. When you get out to 2023, it starts to reduce, and Block 8 becomes something like 50%, and Blocks 9 and 10 come into play. From 2024-2025 on, then we get down to Block 11, and that starts to make a contribution. At this stage of the ramp-up, Block 8's a significant part of production.
Thank you. That's very clear.
Thanks, Leroy. Claudia?
Thank you. We have no further questions on the audio line. Stewart, can I hand back to you for questions on the webcast?
Yes. I've got just one and a half question. One was just to round back on Tanya's question on inflation, just to look at 5% - 6% that peers are using, is that a good level?
Yes.
Yes, Tanya, it is. Siphelele Mdudu from Excelsia has asked a question about just contact with Sorry, I can't find it here, but from my memory, the cash lockup in the DRC.
Sort of what kind of contact have we had in the D.R.C., and when will this be resolved?
Okay, thanks. It is a question, unfortunately, that we get asked at every call. Yes, it's $485 million our share that's locked up there. We maintain contacts with Barrick all of the time, regularly. We're talking a few times a week, both between Sicelo. Sicelo sits on the board of the Kibali JV and is in regular contact with Barrick and myself. I'm also in very regular contact with Barrick, both with the Chief Operating Officer of Africa and as well as the Chief Executive Officer. Certainly, what is happening there is, as we recall in the last quarter, a new cabinet was appointed by the president. There has been a commission that's been appointed to deal with the approval of the cash repatriation and exemption from the mining code. Kibali JV has made an application for exemption because it qualifies for that.
A new central bank governor has been appointed. We do take comfort from the fact that both the cabinet and the central bank governor are aligned to the president, and so that is positive momentum. There's an industry-wide approach that is being considered. Barrick's Chief Executive Officer has had a few high-level visits to the DRC quite recently, and we're really hoping to see a positive resolution soon. Unfortunately, I'm unable to give you an exact timing of that, and we'll have to keep you posted on that.
Thanks very much, Christine. I think that brings us to a close. Christine, would you like to make any closing remarks?
Yes, I'd like to thank everybody for dialing into the call today and asking all the questions and being engaged with us. The comfort that I'd like to give you is that we, as a management team, are really committed to improving performance in the second half, to also delivering on managing, actually, the financial and operating risks to the business. We remain firmly focused on our strategy, to create long-term value for our shareholders. Finally, this will be my last report as interim Chief Executive Officer . I'll revert to my role as Chief Financial Officer from the 1st of September, and I'd like to thank you all for your engagement and support over the past year. We're looking forward to having Alberto Calderón on board from the beginning of September. Thank you.