Good afternoon, ladies and gentlemen, and welcome to the AngloGold Ashanti Q3 2020 market update conference call. All participants are currently on listen only mode. 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 then zero. Please note that this call is being recorded. I would now like to turn the conference over to Stewart Bailey. Please go ahead, sir.
Thank you, Danae. Thanks, everybody, for joining us for our Q3 market update. Before we start, I would ask you please to look at the safe harbor statement, which is at the front of the presentation. It contains important information, particularly regarding forward-looking statements. I urge you to reference it carefully. We have a full plate for you today. Christine will be talking through a high-level view of our performance and strategy. Ian Kramer, our Interim CFO, will be talking through the financial performance. Sicelo Ntuli , our Chief Operating Officer for the Africa region, will be talking through those operations. Ludwig Eybers doing the same for the international operations before Graham gives us a detailed walk-through the Obuasi project performance. Christine will wrap up. Without further ado, I'm going to hand over to Christine.
Thanks, Stewart, and good day, everyone. Let me start by reiterating AngloGold Ashanti's strategic objectives. This remains to safely and responsibly deliver better quality production aimed at widening margins, extending mine life, and improving the overall quality of our portfolio while focusing on disciplined capital allocation. Back in 2014, we committed ourselves to a long-term goal of creating a self-sustaining company, which would offer real exposure to gold and improving returns over time while not asking shareholders to recapitalize the business every few years. I'm pleased to say that not only have we consistently delivered on that objective, but it remains central to the way we do business. COVID-19 does not change that. We've been fortunate enough to navigate this pandemic through a combination of proactive initiatives, quick adaptation where necessary, and of course, a supportive gold price. We take none of this for granted.
We're mindful that there are many who are struggling, and we continue to lend support to our host communities and others to ensure we all come out of this as whole as possible. We're committed to maintaining our discipline, a trait which has stood us in good stead through much leaner time standards. We've also continued to strengthen our balance sheet, capturing wider margins, growing Ore Reserves, and ramping up Obuasi to full production. The thread that runs through all of this work is our effort to maintain and strengthen our license to operate through effective ESG practices. On the safety front, we tragically recorded one fatality during the first quarter, which we spoke at our H1 results. That took place at Obuasi in July, where a security guard passed away after being struck by a private vehicle at the entrance to an employee housing estate.
This is another hard reminder of the essential work and attention required to achieve zero harm at all of our workplaces. We have a firm foundation on which to build those improvements with an all-in frequency rate which improved by 31% year-on-year to 2.23 injuries per million hours worked, an all-time low for AngloGold Ashanti. We continue to proactively manage the COVID-19 impact across our operations. Moving on to slide six. As we discussed with our Q2 results in August, production and capital remain heavily backing weighted. This is especially true for CapEx this year. Production this year has been resilient, particularly in light of the potential disruption from COVID-19. For the first nine months, we produced 2.3 million ounces, taking us 75% of the way to the midpoint of our full-year guidance.
Over Q3, production of 837,000 oz was 11% higher quarter-on-quarter, underpinned by strong performances at most sites. Sunrise Dam and AGA Mineração were the standouts. Obuasi was another star, continuing its ramp-up with a 52% quarter-on-quarter increase in production. COVID-19 cuts only around 18,000 oz of production, with most of it again coming from South Africa. The cost performance was strong. All-in sustaining costs rose 1% year-on-year to $1,044/oz . Once you strip out the $51 an ounce impact related to COVID-19, the underlying number would have come in below $1,000 an ounce. We generated strong improvements in cash flow on every metric. Free cash flow almost quadrupled year-on-year to $339 million. That's all the more impressive when you consider it doesn't account for a considerable chunk of cash which remains in the DRC, awaiting repatriation.
Ian will talk to that in a little more detail in a moment. Net debt almost halved year-on-year to $875 million. That's the lowest in almost a decade. This was due mainly to strong cash generation and was helped along by the $200 million initial proceeds from the sale of our producing assets in South Africa. With the falling debt and rapidly increasing cash flow, you can really see our leverage improve. Net debt to EBITDA came in at 0.36x , which is the lowest level since 2011. Our all-in sustaining cost margins have grown to a healthy 45% during the quarter, helped by our focus on cost control and of course, the strong gold price. The average spot price for Q3 was $1,911 an ounce.
Looking at the first nine months of the year, that margin has widened to 45%, up from 25% in the same period last year. This 3 percentage point increase in margin over that period has translated into an almost 10-fold increase in free cash flow generation, again demonstrating our strong leverage to the gold price. Moving on to capital allocation. We have a clearly defined capital allocation framework, which requires that we improve returns to shareholders while balancing our competing capital priorities to invest in upgrading our portfolio and improving the balance sheet where possible. I'm pleased to announce an increase in our dividend payout ratio from 10% to 20% of free cash flow generated before growth capital. As the slide shows, this shift nicely rebalances our capital allocation and improves the direct reward to shareholders.
Based on the last 12 months' performance, this formula implies a competitive dividend yield of around 1.9% at our current share price. We remain focused on improving the quality of our production over the long term. We've traded out of relatively higher cost and shorter life assets in South Africa and including Mali, while simultaneously ramping up lower cost and very long life production at Obuasi. While we've defied skeptics by marching Obuasi steadily towards commercial production, we're making excellent headway in increasing development and brownfield exploration, both aimed at improving operating flexibility and increasing reserves. Balance sheet strength remains a central plank in our approach, supporting feasibility studies at Gramalote JV and Quebradona, and brings us closer to realizing value from two top-tier projects in Colombia. With that, I'll hand over to Ian Kramer to cover the financial performance over the quarter.
Thanks, Christine. Good day, everybody. We have delivered a solid operational and financial performance for the third quarter of the year, which saw the last quarter in which our South African operating assets contributed to the group's performance before the sale thereof to Harmony Gold. The sale was concluded at the end of the quarter, with Harmony Gold taking control of these assets on 1 October. Despite the accounting treatment of the South African assets as discontinued operations, I will discuss the performance of the group as a whole to make comparisons against last year's performance easier. Production for the quarter increased by 1% to 837,000 oz compared to the same quarter last year. The solid production results were underpinned by strong performances at most sites, with standout performances at Sunrise Dam and AGA Mineração.
The Obuasi redevelopment project continued its ramp up, delivering a 52% quarter-on-quarter increase in pre-production ounces. These performances assisted to support the impact of reduced performances at Tropicana and Cerro Vanguardia. Our all-in sustaining cost rose by only 1% or $13/oz to $1,044/oz in the third quarter of 2020 as compared to the third quarter of 2019. This mainly reflected higher cash costs. Adjusted earnings before interest, tax, depreciation, and amortization or adjusted EBITDA increased by 72% to $803 million from $468 million in the third quarter of 2019. Cash flow was robust, demonstrating significant support from the rising gold price. Free cash flow generated was $339 million in the third quarter of 2020.
This was a near fourfold increase from the $86 million generated in the comparable quarter of last year as a result of a 30% higher gold price received, lower costs from continuing operations, lower capital expenditure, which was partially offset by higher tax paid. This is the highest free cash flow generation for the group since the first quarter of 2011. Free cash flow before growth capital, the metric on which dividends are calculated, increased by 104% to $361 million during this quarter, compared to $177 million in the third quarter of 2019. It should be noted that the $200 million proceeds received on the SA asset sales are excluded from free cash flow. As mentioned by Christine, free cash flow does not include the cash flows from Kibali, which remains in joint venture bank accounts in the DRC.
Cash received from Kibali for the first quarter totaled $38 million, making total cash received for the year to date to $92 million. The company's attributable share of the outstanding cash balance that has not yet been repatriated from the DRC grew by $66 million in the first quarter to $339 million. Barrick, the operator of the Kibali joint venture, continues to engage with the DRC government regarding remittance of cash balance. Cash flows were further impacted by VAT receivables that continued to be locked up at Geita and at Kibali, as well as by an increase in lock-up of recoverable export duties at Cerro Vanguardia . The 2020 Finance Act becoming effective on 1 July 2020 in Tanzania, amending the 2014 Value-Added Tax Act with retrospective effect, thereby allowing for recovery of VAT refunds for mineral exporters from July 2020 onwards.
The administrative VAT verification process has not yet resumed at Geita. This is viewed by us as just timing issue. In Argentina, legislation was adopted to decrease export duty rates from 12% to 8%, effective from the end of September 2020. The total capital expenditure decreased by 31% year-on-year to $161 million in the first quarter of 2020, compared to $234 million in the third quarter of 2019. This decrease was largely due to the lower project spend at Obuasi, due to the impact of the pandemic on delivering of supplies and restrictions on contractor movement, as well as capitalized pre-production revenue offsetting a portion of the growth capital spend during the quarter. Growth capital expenditure declined to $22 million in the quarter, compared to $19 million in the third quarter of 2019.
Total sustaining capital expenditure marginally declined by 3% to $139 million in the first quarter compared to last year. Our strategy of improving operating flexibility through investment in Ore Reserve development and reserve conversion at sites with high geological potential over the next two to three years remains firmly on track. Moving to slide 12, our total cash cost for the quarter increased marginally by 2% to $801/oz , compared to $786/oz last year. Favorable exchange rate movements and improved grades were partly offset by inflationary pressures, reduced throughput volumes, and higher royalty payments. Average recovered grades improved by 4% when compared to last year, with the most significant improvements coming from Sunrise Dam, Iduapriem, Geita, and Siguiri. Throughput volumes decreased on average by 6%, with the biggest impact at South African region and Iduapriem. Excluding South Africa, throughput volumes decreased by less than 2%.
As mentioned before, the 1% increase in all-in sustaining cost for this quarter compared to last year is the result of higher cash costs. COVID-19-related impacts resulted in the all-in sustaining cost being approximately $51/oz higher for Q3 2020 due to $22 million COVID-19-related costs incurred and approximately 18,000 oz lost production at the South African operations. Turning to the balance sheet. We remain committed to maintaining a flexible balance sheet with an adjusted net debt to adjusted EBITDA target ratio of 1x through the cycle. Adjusted net debt decreased to $875 million at the end of September 2020, a 39% decline from the end of the previous quarter and a 47% reduction compared to the same quarter last year.
This is the lowest level of net debt since 2011 and 72% off its peak in 2014, at the time when the company was self-funding its share of the development cost of Kibali and Tropicana. The ratio of adjusted net debt to adjusted EBITDA at 30 September 2020 was 0.36x , compared with 1.06x a year ago. This is the lowest point for this ratio since 2011, reflecting disciplined reduction in debt and robust cash generation from the business. We managed to achieve this significant long-term balance sheet improvement through our disciplined capital allocation strategy without issuing equity during this whole period. The balance sheet remains robust, with strong liquidity comprising the $1.4 billion RCF, of which approximately $700 million was undrawn.
The undrawn ZAR 4 billion South African RCF and cash and cash equivalents of approximately $1 billion at 30 September 2020, excluding any cash balances at Kibali and Sadiola. Our new 10-year $700 million bond offering at the end of the quarter was more than 6.5x oversubscribed and priced at 3.75% per annum, the lowest achieved by the company for a bond offering. The net proceeds were directed to repay a portion of the outstanding borrowings under the $1.4 billion multi-currency RCF at the beginning of the fourth quarter. The new bonds will reduce annual finance costs by $11 million per annum when compared to the 2020 bond that was redeemed in April 2020. The initial proceeds of $200 million received from the sale of the South African producing assets were utilized to further reduce net debt.
On 19 October 2020, we voluntarily canceled our ZAR 2.5 billion RCF in South Africa, leaving us with ZAR 1.5 billion of facilities undrawn in South Africa. The undrawn billion dollars syndicated bridge loan facility originally entered into in April 2020 to provide additional financial flexibility amid the uncertainty of the COVID-19 pandemic was fully canceled in early October. Our credit ratings are unchanged. We have investment grade ratings from Moody's and Fitch, and a sub-investment grade rating from S&P. Turning to my last slide on the restated guidance, we expect a strong finish to the year, especially at Geita, as well as at the operations in Australia and Brazil. As we previously flagged during the year, COVID-19 has resulted in some capital expenditure deferrals across the portfolio.
The most notable thereof is at Obuasi, where we expect $70 million-$90 million of Phase 2 project capital being rolled over into 2021. We expect a significant step-up in sustaining capital expenditure in the fourth quarter of 2020 as we invest in waste stripping at the Iduapriem and Tropicana and commence the planned development portion of the third underground mining area at the Geita Hill ore body. These investments will be made in parallel with the ongoing investments in Ore Reserve development and exploration. For the year-end reserve declaration, our Ore Reserve pricing will increase by $100 an ounce to $1,200 an ounce, reflecting the impact of the increased gold price.
On 21 September 2020, the company restated its annual guidance given improved operating certainty amid the COVID-19 pandemic and in anticipation of the conclusion of the sale of its South African assets, which occurred at the end of September. The group is expected to produce between 3.03 million ounces and 3.1 million ounces, including nine months of production from the South African producing assets. All-in sustaining cost is expected to be between $1,060 and $1,120 an ounce, again, including contributions from the South African assets up to the end of September. Sustaining capital expenditure is forecast between $610 million and $650 million, and non-sustaining or growth capital expenditure between $280 million and $300 million, resulting in total capital expenditure of between $890 million and $950 million. We remain mindful that the COVID-19 pandemic, its impact on communities and economies, any actions authorities may take in response to it, are largely unpredictable.
With that, I'll hand over to Sicelo.
Thanks, Ian, and greetings to everyone. I'm now on slide number 16. Let's take a high-level look at the Africa operations, starting this time with South Africa. The region produced 96,000 oz during the quarter at an all-in sustaining cost of $1,322 an ounce, with production 15% down compared to the previous year, largely affected by the mobilization of personnel after the COVID-19 lockdown and cost impact as a result of the lower production. Despite the impact, the region generated $50 million in free cash flow during the quarter. The sale of the South Africa region was successfully completed on the 30th of September and marks the end of an era for AngloGold Ashanti in the region. Now moving on to continental Africa.
The region produced 411,000 oz at an all-in sustaining cost of $903 an ounce compared to 387,000 oz at an all-in sustaining cost of $900 an ounce in Q3 of 2019. The region continues to perform exceptionally well, assisted by operational excellence drive and efficiency improvement, as is evident in the quarterly results. The region generated free cash flow of $218 million during the period, compared to $94 million during the same period of last year. We have delivered solid production, cost, and cash flow performance for the first nine months of the year, with the year outlook indicating continued performance in quarter four. We continue to see encouraging results from Siguiri with substantial improvement in recovery, while the Obuasi redevelopment project continues to ramp up, delivering a 62% increase quarter on quarter in production, and Phase 1 commissioning completed at the end of September.
At Geita, the production performance was aligned to the same period in 2019. During Q3, Geita achieved an all-in sustaining cost of $832 an ounce, 6% lower than the same period in 2019. Post the approval of the mining permit for Geita Hill, mobilization has commenced, and ground support for the new portal is underway. Kibali recorded another solid performance during the quarter, maintaining attributable production at 91,000 oz, coming in at an all-in sustaining cost of $765 an ounce. Iduapriem had another strong quarter with on-target production, with cost impacted by higher royalties and exploration costs as we drill to find further incremental opportunities that compared to the same quarter in 2019. It is important to note that Iduapriem is entering an investment phase over the next three years in cutback and TSF.
Accelerated waste stripping in Block 7 and 8, Cut 2, continues using a split shell design, which will result in accessing over 2 million tons of ore at a grade of 1.75 g/ton by the middle of 2021. All of these initiatives are expected to extend the life of mine to 2081. The Block 1 drilling has returned very positive results, with an updated model also expected in the fourth quarter. Looking at Siguiri in more detail on slide number 17. We continue to progress the turnaround initiative despite some material supply challenges arising from COVID-19. We saw a 7% improvement in recovery quarter-on-quarter as a result of recovery improvement initiatives. Encouragingly, the September recovery on average exceeded 82% with peaks of up to 86% realized. This was largely as a result of completing improvements in gravity milling and classification circuits.
The crushing plant has performed well through the rainy season and continues to meet the 50/50 blend design target, confirming that the wet season modifications and stockpile strategies have mitigated the challenges experienced in 2019. We reported in the first half about the presence of carbonaceous material with the associated effects on metallurgical recovery. We have completed the design and manufacture of CIL conversions for three additional tanks to improve the plant resilience to grade robbing. Conversion of the tanks are currently in progress and commissioning is planned for the end of this year. We are also happy to report that we have received the mining and road construction permit from the government to access the Block 2 mining area. We are planning to declare a new reserve in Block 2 by the end of this year.
We are also working to finalize a social partnership with the host community as part of our company values. Block 2 will displace the marginal ore plant feed material with higher grade oxide feed. Turning to Geita on slide 18. We continue our strong exploration focus to increase Ore Reserves. We have significantly increased underground resources and reserves from 2015 since entering underground mining for the first time. This strong focus is continuing into the future, supported by significant progress of reserve conversion drilling. As reported, all key regulatory approvals have been obtained for Geita Hill underground. The opening up of Geita Hill underground mineral resource and Ore Reserve has commenced with portal establishment. The sequence of mining will start in Block 1 and Block 2 and proceed along strike towards the eastern side of Block 5 and Block 6.
Geita Hill opens up a new third underground high-grade mining source for Geita mine. As can be seen from the picture, there is potential for a large reserve along strike, we will begin to declare new reserves starting in 2021. Looking at open pit potential at Geita on slide 18. As discussed briefly in the last quarterly results. We will be declaring a significant reserve in Nyamulilima by the end of this year. This area replaces Nyankanga open pit as it was depleted in the current quarter. It will ensure that we continue to fuel the mill at 5 million tons per annum with fresh ore over the long term. Subject to government approvals, we expect to be mining in Nyamulilima in the second half of 2021. This area gives Geita the opportunity to again add open pit reserve.
I look forward to updating you at our next quarterly results with reserve additions, which we are expecting to exceed current depletion. In conclusion, our focus as we go into the final quarter of the year is to maintain the strong performance of all of our assets. At Siguiri, the team continues to work on improving the recovery rate as it continues to move in the right direction. Our exploration projects continue to yield positive results, and we will update the market with our Q4 results on the reserve growth results, primarily at Geita and Siguiri. Thank you. I will now hand over to Ludwig.
Thank you, Sicelo, and good day, everyone. The international operations completed a solid third quarter with noticeable improvement across all key operating and financial metrics. I'm particularly pleased to report that our safety metrics are continuing to improve with our all-in frequency rates reducing by over 30% year-on-year. Starting with Americas. The region produced 181,000 oz of gold in the quarter, slightly above the 179,000 oz delivered in the same quarter last year, with a corresponding all-in sustaining cost, which was markedly lower at $963/oz . This is $155/oz lower than the corresponding period last year. This reflects a strong operating performance from the Brazil assets, which delivered 32,000 oz more than the previous quarter and 12,000 oz more year-on-year. This is despite a continued increase in positive COVID-19 cases reported at our operations.
This performance was largely due to AGA Mineração receiving 103,000 oz in the quarter, showing that the mine has successfully adapted to the additional ground support requirements. Staying in Brazil, Serra Grande's performance was steady at 31,000 oz and an all-in sustaining cost of $912/oz , helped by a record plant throughput of 150,000 tons in August. Moving to Argentina, Cerro Vanguardia delivered a consistent quarter-on-quarter production of 47,000 oz during an extended national lockdown, which started in March. CVSA has advanced their 2020 drill program, which includes 25 km of diamond drilling to test the extenses of known veins and explore new targets in the district. Shifting to Australia, the region produced 149,000 oz in the quarter, which was above the 146,000 oz reported in the same quarter in 2019, and a significant 19,000 oz higher than what was delivered in Q2 this year.
The quarter-on-quarter improvement can be largely attributed to the new management team at Sunrise Dam, who increased production by 25% and lowered total cash cost per ounce by 10%. Gold production at Tropicana Mine was 75,000 oz, which reflects the planned 13% year-on-year drop in grade as we progress stockpiles and begin waste stripping in Havana stage 1 cutback. The impact of treating stockpiles has increased the year-on-year all-in sustaining cost to $1,094/oz , although this was partly mitigated by operating improvements, including higher mill throughput and bringing the new Boston Shaker underground mine into commercial production. Moving to slide 23. Staying with Tropicana, I'm pleased to report that the Boston Shaker underground mine was delivered on schedule and on budget. Production was successfully ramped up to 65,000 tons during the quarter and will reach steady state production by the second half of 2021.
The new underground mine will contribute around about 100,000 oz of gold production per year over the next seven years on a 100% basis. The decision was taken in June 2020 to progress the Havana stage 2 cutback, which will allow access to deeper Havana ore body from 2022. While the cutback is in progress, more feed will be sourced from Boston Shaker open pit and underground mine, supplemented by lower grade stockpile, which will result in a near-term drop in grades. Looking ahead, Tropicana will continue to deliver between 400,000 oz- 450,000 oz of gold production at 100% in 2020 and 2021, and will increase to between 450,000 oz and 500,000 oz from 2022 as the low-grade stockpile is replaced by higher-grade ore sourced from the Boston Shaker underground and Havana cutback. Moving to slide 24.
It's exciting to report that Boston Shaker and Tropicana ore bodies are open at their decline position to take full advantage of the potential for extensions in ore bodies. In addition, an underground drill drive is currently being developed from the Boston Shaker decline to create drill platforms to explore the Tropicana ore body. The first diamond drill rig has commenced drilling, and if successful, we expect to be in a position to access ore as early as second half 2021. We will also continue the drilling down dip at Boston Shaker and complete a trade-off study between open pit and underground mining at Havana pits and Havana South. Tropicana's remaining open pit resource of around 3 million ounces will be mined over the life of mine, in addition to the underground resource, which is about 2.9 million ounces.
Moving to slide 25. Returning to Sunrise Dam, the site team is focused to accelerate the development needed to create new drill platforms, which will allow us to identify additional ore bodies. The primary ore source for Sunrise Dam is the large Vogue ore body, which can deliver a maximum of around 2.5 million tons per annum at a grade of around 2.7 g/ ton. The remaining mill capacity is currently filled with 0.09 g/ ton marginal stockpiles. The immediate goal is to displace this marginal stockpile material with full-grade ore from other ore sources. Suitable ore sources include open pit and Golden Delicious satellite deposit. Approval has been given to begin pre-stripping this deposit.
Golden Delicious is situated about 12 km from Sunrise Dam plant and expected to deliver about 136,000 oz of gold production over the next three years, with first gold expected in Q2 2021. We are also currently assessing the feasibility of various other prospective satellite deposits. In addition, early underground drilling results have been extremely encouraging, and which has led to an increase in the ore body envelope. This includes a recently discovered Frankie ore body within the western ramps and extensions to the Vogue and the Carey Shear ore bodies. Moving to slide 26, and looking ahead, it's imperative that we continue to drive our operational excellence programs to get the most out of our assets. As I've noted before, this includes increasing investments in Ore Reserve development and exploration drilling to identify additional ore sources across our operations.
By way of example, the exploration program at Cuiabá has delivered encouraging intercepts in secondary ore bodies parallel to the main ore body and identified a new ore body called Descoberto near the existing mine. We have accelerated exploration activities and mobilized additional surface drill rigs. The additional drilling at CDS has confirmed the potential to scale up the Rosalino open pit, expand the Cristina mine, and has identified a new ore body called Pneu. At Serra Grande, we have seen encouraging intercepts near existing infrastructure, including the additional high-grade ore bodies, [inaudible], and extensions to other ore bodies at depth, and continued success at the Palmeiras Sul tenements. As I mentioned earlier, the drilling program at CVSA is also well underway and will increase to about 100 km of drilling over the next three years.
This has the potential to add 1 million ounces of gold and about 7 million ounces of silver resources. We have a clear path to create value by optimizing our existing operations and continuing to develop new growth projects to add new low-cost ounces to the portfolio. In closing, the focus for 2020 remains unchanged. Prioritizing spend on development and exploration to improve resource confidence and identify new ore sources, growing near-term reserves and creating flexibility, driving operational excellence to improve cost and efficiencies, and developing new low-cost projects to add to the portfolio. With that, I'll hand over to Graham, who will talk to Obuasi.
Thanks very much, Ludwig. Hello, everybody, and this time, greetings from Obuasi. I've tried to find a quiet location, but with a bit of luck, you'll hear a truck rumble by from time to time. The outlook for Obuasi has not changed from what I've reported previously. We remain on track. This year, we are operating Phase 1 at 2,000 tons a day. For Phase 2, which provides capacity to 4,000 ton a day, we are targeting commissioning in quarter one next year and ramp up to 4,000 tons a day in quarter two next year. Despite the COVID-19 challenges, we've made good progress. The team has done an incredible job navigating the impacts of manufacturing and logistics delays and travel restrictions, and their commitment and dedication over this period has been quite inspiring.
I'll talk to Phase 1 operational readiness first, and here we targeted the 2,000 tons a day, and in parallel, we're building Phase 2. Mining rates were constrained by skill labor shortages caused by international travel restrictions, especially from Australia, though the focus on in-country recruitment and training has helped bridge the gap. The mine plan has been revised to account for the COVID limitations of the past six months. This plan achieves the required ramp-up in production in parallel with the construction schedule. Good progress is being made in the second mine production area at Block 8 Lower. The mill is performing well and is achieving the planned efficiencies. Importantly, resource reconciliations continue to show good trends. The drilling programs remain on track. We have now grade controlled or proven Ore Reserves out for two years and probable reserves out for 10.
Q3 gold production was just over 46,000 oz, and total gold production so far is 95,000 oz. We are tracking operating costs carefully, and apart from volume-related variances, unit costs are tracking well to the feasibility study estimates. Now on slide 29, and for the Phase 2 construction, the photographs in the slide tell a story. In the process plant, concrete, structural steel, mechanical equipment installation has largely been completed. Piping, electrics, and instrumentation works are well advanced. A pre-commissioning has commenced on the mills, on the regrind mill, and in the gold room. Earthworks for the Biox TSF and for the water dam is now well advanced. The KRS shaft and the materials handling system rebuild has progressed well. The rebuilt winder has now been certified by the regulator. Regarding the new ventilation shaft, the GCVS ventilation shaft, construction of the fans and the substation is close to completion.
However, geotechnical issues has delayed the commencement of reaming of the shaft, which is expected to be completed in late quarter one next year. From a cost perspective, the project remains on budget. As we move into 2021, there will be continuation of Phase 2, that capital would be about $40 million in 2021. As I've mentioned previously, there is a Phase 3 to Obuasi's redevelopment, this involves the upgrade of the KMS and the BSVS shafts and a new ventilation shaft and underground dewatering systems. The total capital for that is $95 million, it's spread over three years, $73 million of which will be in 2021. I think the last point that I'd like to make is that we're landing the project into a good gold price.
When we announced the project in 2018, the IRR was 23% at $1,240 an ounce, with a payback of around six and a half years. In the current environment and allowing for COVID-19 related issues that I've discussed, the IRR is 37% at $1,700, with a payback of around six years. At $2,000 an ounce, the IRR ramps up to something like 46%. With that, I'll hand back to Christine. Thank you.
Thanks, Graham. The team and I look forward to joining you at Obuasi soon. Just in conclusion, 2020 has presented us with a unique set of challenges. It has nevertheless been gratifying to see strong cohesion across the business with our global team working together seamlessly to ensure the business will end the year in excellent shape. In fact, even better than 12 months ago. We had a difficult start to the year from a safety perspective. We'll be looking to continue the strong recovery we've seen in the subsequent months. We're also in a good rhythm with respect to COVID-19, with our sites embracing the protocols designed to maintain business continuity and keep people safe. As we progress into Q4, we're well positioned to deliver on our operational priorities.
Cash conversion, especially from the DRC, will continue to be a priority for us even as we see the very strong cash flows coming from the remainder of our portfolio. Likewise, the recovery of the historical VAT receivables in Tanzania remains a focus. As we unwind our cash overhang, complemented by the strong cash flow generated across the business, will translate into enhanced returns to shareholders. The operational and exploration teams continue to assess our Ore Reserve conversion initiatives, where we're already seeing positive returns from our investments. At Obuasi, despite the hurdles during the year, we remain laser focused on completion of Phase 2 construction at the end of Q1 2021. Likewise, we aim to progress our Colombian project within the first half of 2021 with the aim of adding new low-cost ounces to our portfolio.
We will not for a moment relax our discipline in managing costs and capital, ensuring we capitalize on the strong gold price environment. Our fundamentals are fast improving, and we have a suite of catalysts in the short, medium, and long term. Our aims remain very clearly to build a solid, predictable business that delivers value through the cycle. Thank you. With that, we'll open the call for questions.
Thank you, ma'am. Ladies and gentlemen, for those on the conference call today, if you would like to ask a question, please press star and then one now. If you decide to withdraw the question, please press star and then two. Again if you would like to ask a question, please press star and then one. The first question we have is from Shilan Modi from UBS.
Afternoon, team. A couple of questions from my side. I think that you guys have done well during this year, during a difficult time. You've improved the cash position in the business, I think that's partially what's driving the change to the dividend policy. Maybe give us some more color on the thought process you guys went through as a team and with the board when changing the dividend policy. The reason I ask this question is because of the potential projects that you have on the cards coming next year, how does that play into your thinking in case the gold price had to pull back? You'd effectively be leveraging up while paying higher dividends than otherwise. That's where the question's coming from. The second question from me is just what's your thinking and position on the cash lockups that you have currently?
There's the VAT lockup in Tanzania, there's a VAT lockup and a cash restriction or lockup in the DRC. Just provide some additional color on that. If you can, you mentioned that you're going to be increasing your exploration expenditure or converting more resources to reserves than getting more resources as well. Maybe just give us an idea of what you think the cost of that would be per year, so like in dollar million terms. Thanks.
Okay. Thanks for those questions, Shilan. I'll ask Tim to take the last question. I'll deal with the first two questions. I think certainly, when we talk about our dividend policy, this is how we look at our capital allocation framework. It's to ensure balance across the three pillars within that framework. I think firstly, the first pillar is about reinvesting in our ore bodies to improve reserve confidence and self-funding our capital requirements via brownfield projects or greenfield projects through the cycle. Secondly, it is about our balance sheet and prioritizing debt reduction, which we've done. That has actually positioned us at the lowest debt level over the 10-year period. Thirdly, it is about the dividend payout to shareholders, which we've increased up to 20% of free cash flow before growth capital.
I think certainly when we've looked at it and in the discussions with the board, we do plan prudently over the long term. Our reserve planning price is $1,200 an ounce, as we said. That is what's being captured in our plan. We do have a revenue planning price assumption, which is just about $1,400 an ounce. What we've assumed is clearly we're happy with where the debt is, and clearly with improved cash flows, we do see debt reducing further. We will be self-funding our capital requirements, we're quite comfortable that the dividend payout can be sustained through the cycle. I hope that gives you comfort regarding the dividends. I think specifically regarding the cash lockups in the DRC, I think, yes, the amount has increased by $56 million in the quarter to $359 million, and that's AGA's share.
This represents 60% of the free cash flow generated by Kibali since the changes in the mining code in late 2018. I think bear in mind, the cash is available for Kibali's use, and it does sit in a dollar account in the name of the JV. Barrick, who is our JV partner, who is also the operator, does continue to engage with the DRC government, both regarding the 2018 mining code and the cash repatriation. We do remain in close discussions with Barrick in that regard. There's certainly an acknowledgement by the government that they need to allow for that repatriation to encourage investment in the country. Barrick did release a press statement last week where the CEO Mark Bristow had recently had a meeting with the president of the DRC in country.
Certainly, we are seeing varying positive developments, and we believe that it is a matter of time before we receive the cash. I think specifically relating to the VAT in the DRC, it does not sit in our working capital amount on the balance sheet. There also we've seen the reduction of offsets against corporate taxes, and this is per the agreement that was reached with the government there in late 2018. As regards Tanzania, there is an historical VAT balance of $131 million, and that we are engaging with the tax authorities on as regards the recovery mechanisms. We've had similar recovery mechanisms in Tanzania in the past, and so we'll certainly keep you posted on that. I think specifically there was changes in the Finance Act in Tanzania in July 2020.
Hence, we're not expecting any further VAT lockups going forward because what the Finance Act allows for is after following an administrative process, that we are then able to automatically offset the VAT against corporate taxes. Tim, can I hand over to you with regards to the spend relating to the reserve conversion?
Yes. When you look at the spend that's related to reserve conversion, strictly on the spending for resource reserve conversion, it ends up being about $60 million-$70 million.
Okay.
In that range, when you look at the entire exploration investment portfolio from both brownfields and greenfields investment, that will be in the range of about $170 million.
Thanks very much. If you could put them together, you're going to be looking at just under $250 million.
Yeah. The bottom of the band is right.
Okay, perfect. Thanks so much.
Thanks, Shilan.
Thank you. The next question we have is from Liam Fitzpatrick from Deutsche Bank.
[Inaudible]
Okay. Thank you.
Thank you.
Go ahead, Liam.
Sorry. On the Colombian projects, a couple of questions on those. It seems like we're getting closer to a decision there. Given the feasibility study results are expected in H1, when do you anticipate the projects could go forward for board approval? In terms of the development strategy, are you still planning to bring in an additional partner? Is the likely path that you'll develop both of these projects simultaneously? On the CapEx side, I know we'll get detailed guidance early next year, but can you give us a rough kind of feel and range for sustaining CapEx next year compared to 2020? Thank you.
Okay. Thanks for those questions, Liam. I think specifically. I'll ask Ian to address the sustaining CapEx guidance on a dollar per ounce basis for next year. I think specifically on the Colombian projects, and certainly in terms of our [sales strategy] . You're correct in that we're targeting the completion of the feasibility studies of these projects within the first half. We see Gramalote slightly ahead of Quebradona. I think just bearing in mind that there we do have a partner who is also now the operator, B2Gold. It's a 50/50 partnership. Certainly the feasibility study is targeting for completion by the end of March 2021. Also bear in mind that the project is already permitted, that can proceed quite soon after board approval.
I think, specifically relating to Quebradona, yes, we are targeting the feasibility study to be completed by the middle of next year. In particular, also we're targeting receiving the environmental permits in that timeframe as well. We are looking at building that project on our own, I think as regards financing or risk mitigation options, I think that we still explore it. I think in particular, in the form of take or pay agreement or supplier-based financing and project financing, these are all part of what we are assessing in the feasibility study. I think, as I referred to the affordability on our balance sheet, I think certainly we are able to self-fund our share in Gramalote as well as the Quebradona project, we're certainly not closed to looking at other forms of financing as well. Then Ian on the sustaining CapEx.
Liam, on the sustaining capital number, obviously this year we flagged to the market that we're looking at a range somewhere between $200-$230/oz , with the additional $30/oz spent for the resource and reserve conversion. That process will continue. We said that it's a multiple year investment in order to convert that. On top of that, you need to consider the new compliance requirements that's coming out, especially from Brazil on the tailing side. We put that in the market update, the expectation of what that spend would be for us, in the region of between $70 million-$85 million. It's quite a step up from 2020's levels of around $25 million-$30 million. It's a once-off step up in order to ensure compliance to the legislation that was promulgated in Q3 in Brazil.
I think in addition to that, just bear in mind that there is also the continuing, the first stripping drives that are carrying on at Iduapriem and Tropicana as well as the [inaudible] development. Obuasi will also start to play in on the sustaining CapEx numbers because it would be the first full year where we would see sustaining CapEx coming through, shifting from growth capital to sustaining CapEx. Hopefully, that gives you a sense of what is happening on the sustaining CapEx side.
Thanks.
Okay. Thank you.
We'll be in a position in February next year to give you more definition around. We are aiming for longer than in-year guidance. Expect a two-year guidance next year in February, and we'll give you more flavor regarding both sustaining and growth CapEx.
Okay, great. Thank you.
Thank you, [inaudible]. Ma'am, we have one final question. Are you able to take it?
Yes, we are.
Thank you. The last question we have is from Patrick Mann from Bank of America.
Hi. Good day, guys. Thank you for the call. I wanted to follow up just on Geita and the longer-term outlook. From what Sicelo was saying, it sounded like there's going to be a gap in open pits ore that's available until the new area's being stripped. Can you just give us an idea of what it looks like? Is it only underground ore from now, and when will you be able to call them all again? The second question is, it seems very good improvements at Sunrise Dam and Mineração as you guys have pointed out. How sustainable are those from here? Thanks.
Thanks, Patrick. Sicelo will handle Geita and Ludwig will talk to Sunrise Dam and Mineração .
Thanks, Patrick. I think the way to look at Geita is that the ore feed or the ore sources for this year has been Nyankanga open pits, which depleted during the course of this quarter. Nyankanga underground ore plus then the Star & Comet ore source. Those are the three predominant ore sources for now. On an ongoing basis, we've built quite a lot of stock piles, high-grade stock piles from Nyankanga when we finished Cut 8. We're really at the bottom of the pit, hardly any waste mining. We've built up stock piles that will last us for about 12-14 months, and those are the stock piles that will carry us into 2021. Going into next year, expect the stock piles to be coming in. We have got Star & Comet, we have got Nyankanga.
At the same time, they are opening up the two new mines of Geita Hill underground as well as the Nyamulilima open pit area. Production-wise, in terms of profile, this year certainly will be a record. I think this year will be, if not the highest in the history of the mine. Very strong production. Next year, we'll see a slight pullback as we sort of set up the mine. 2022, then we should be back in the 500,000 oz-600,000 oz range in the production sort of level. Thanks.
Thank you. Patrick, it's Ludwig. Just to comment on your question around Sunrise Dam and the Brazil operations. The focus for the last year and continuing going forward is focusing on the ORD, and that should create the flexibility and also in the infill drilling to create that confidence in the ore body. That's going to continue as we go into 2021. What you've seen recently is actually a result of that extra flexibility that we've created in both these operations and also the confidence we're gaining every month almost on the ore confidence. Going forward, you will see short-term fluctuations maybe, but we will continue with this progress in drilling and the flexibility. We're confident that we actually can maintain this that we've seen in the last quarter.
Thank you both. Thanks very much.
Thanks, Patrick. All right. Finally, I'd just like to thank you for joining our call today. I'd also like to thank you for the support that you've given us during the past year. I think certainly it's quickly approaching, but I'd like to wish everybody a safe holiday season, and we look forward to engaging with you at our year-end results in February 2021. Thanks again, and goodbye.