Afternoon, ladies and gentlemen, and welcome to Angegold Ashanti's 1st Half twenty eighteen Results Conference Call. All participants will be in a listen only mode. There have been an opportunity to ask questions at the end of today's presentation. Please note that this conference is being recorded.
I'd now
like to hand the conference over to Mr. Stuart Bailey. Please go ahead, sir.
Thank you, Judith, and everyone, welcome to our presentation today of our first half results. We have a pretty packed schedule today, running through the overview, the financials and the operating performance.
I would ask you all to please
have a look at the Safe Harbor statement at the beginning of this presentation. It has important information concerning the presentation and forward looking statements. Without further ado, I'm going
to hand over to Venkat.
Thank you, Stuart. Good morning to you all. If I can start off with a slide on strategy, Slide number 4. As always, if we can reiterate how we are guided by our strategy, which has enabled us to be deliberate in terms of how we allocate capital in a way that we believe will create value over the long term. Once again, it is this focus and commitment that has helped us again deliver a strong set of results across every metric today.
We remain committed to delivering a safe and actively managed portfolio with tightly managed costs and capital, which helps ensure that the balance sheet stays robust enough to handle this volatile gold market. We have also never wavered in our commitment to invest in the long term sustainability of our business regardless of market conditions. These pillars support our central objective of improving cash flow and returns on a sustainable basis. And we will and as we will highlight in this presentation, we are well underway in the disciplined work to achieve these outcomes in the business. I'd like to start with our safety performance, which was unfortunately marked by one fatality during the start of the Q2 at Impella, which takes a number of fatal accidents for the year to 3.
These workplace deaths remain far and away the most difficult aspect of the job and I'd like to use the opportunity to send heartfelt condolences of the entire AngloGold Ashanti team to the loved ones of the deceased. As we continue on the journey to eliminate all injuries from our mines, we believe that we must deliver reliably safe production to ensuring ongoing sustainability of our business. We are making important progress in this regard with an all injury frequency rate that improved by almost a third, putting it at its lowest point in the company's history. We continue to focus intently on driving that still lower with particular emphasis on continued improvement of our organizational safety culture at every level and an area we believe is especially important to properly analyze and understand the root causes of accidents and the near misses, namely high potential incidents. Turning now to Slide 6 and now let's look at some of the highlights of the first half of the year.
Production from our retained operations was strong at around 1,600,000 ounces, up 4% year on year. Australia was a major contributor to this performance with a 20% increase in production over the period and Kibali increasing production by almost a third. All in sustaining costs improved 5% year on year with the help of our planned reduction in sustaining capital following the heavy investment last year, helping to offset creeping inflation along with the operational excellence program, which is starting to bear fruit. Ludwig will talk to that in some detail in a few moments on this important internal catalyst. What this all means is that we see our production for the full year at the top end of the guided range and both all in sustaining and total cash costs trending towards the lower end of the guided range.
You'll remember our announcement at the end of February that we completed the sale of our Bald River underground assets, markedly reducing our footprint in South Africa and giving us extra liquidity to putting it down towards paying down our South African debt. A quick look at free cash flow will show a strong improvement over the first half of last year with good positive free cash flow in the second quarter. The strong cash flows and the year on year drop in net debt by 17% means that we have lowered leverage of net debt to EBITDA of just over one time, which means a robust and flexible balance sheet going forward. And just before I hand over to Ludwig, it's worth taking a helicopter view of the portfolio. We are now showing a very good balance with Continental Africa now speaking for 44 percent of our production with strong efficiency gains set to come through as Kibali ramps up this year and security ramps up in 2019.
And let's not forget that this improves further when Abu Dhabi comes online. The Americas now contribute 24% of production, benefiting from significantly weaker currencies and some good work on operational excellence, particularly in Brazil, which will soon pay dividends. Australia is about a 5th of our production and is on a clear improving margin trajectory. This leaves South Africa at a little over a tenth of our production with restructuring underway as we strive to return it back to being a cash generative region. With that, I'll hand you over
to Ludwig. Thank you, Venkat. We are at Slide 9. It's very pleasing to see the international operations deliver another strong performance now that our Inwood investment last year has begun to bear fruit. We had solid contributions from Udiaprem, Kibali and our 2 mines in Australia.
Production was up 5% year on year to 1,370,000 ounces at a total cash cost of $769 down. All in sustaining costs were also down 4% at £948 reflecting not only the lower capital, but also the intensified efforts of our operational excellence initiatives. This performance was achieved despite inflationary pressures dominated by higher fuel prices, adverse inventory movements and the underground transition at Geita, which led to higher cash costs when compared to the same period last year. We expect further increases in production in the second half, especially during the last quarter and the continuing decline in trend in the unit cost given the visibility we have on the success of the operational excellence program. Turning to Slide 10.
Turning to Continental Africa. We had another strong contribution from Ideaprem, delivering an 18% increase in production year on year, driven by better grades and higher Thomas treated. The performance also reflected the benefits of the conversion to CIL tanks to improve the recoveries. And that was still a performing reason was from Kibali. We delivered an impressive 32% increase in production year on year.
This has been driven by the ongoing ramp up of the underground mining of the successful commissioning of the automated underground ore handling system and its integration with the vertical shaft. At Sukuri, production was down as planned due to lower grades, while Geita was negatively affected by a 6% drop in recovered grades, a point of fact in May. And we see those improving over the balance of the year. As we've mentioned before, higher cost of Gator were due to both an anticipated drop in grades from the open pit and high initial costs from the underground mining as that continues to ramp up. This has been exacerbated by more cost being spent as opposed to capitalized along with cost pressures from high fees and royalties.
We still expect performance to improve over the course of the year as the underground operations are ramping up. Slide 11. In Australia, Synodos Dan recorded another strong result, particularly in the Q1, with production increase seen 43% over the previous year. The solid performance was assisted by the successful implementation of the near mining strategy, which together with the new commissioned recovery enhancement project and higher underground grades and volumes will help to continue this outperformance. Capricorna is also starting to reflect improved efficiencies and throughput rates.
Production was up 3% year on year, although costs were also higher due to the greater proportion of waste mining. The focus being the first half was installation of the second 6 megawatt ball mill, which is on track for completion by the end of this year. Looking forward to the rest of the year, we're seeing further improvements across boards. Slide 12. Now moving to the Americas region.
Televan, Guarra and Argentina delivered a solid production, getting strong performance from its crushing, milling and leaching areas. In Brazil, production was lower at Mineracao due to the challenges in accessing other grades and lower tonnages at the Kiribald mine, while Surigord Distributed saw lower grades. The 10 day nationwide trucker strike also had an impact on our performance, which we'll be looking to claw back the second half. We saw very good unit cost improvements year on year given the traction from our operational excellence initiatives in the region. This improvement is expected to continue as we will see the benefits of both a new full shift system and also the headcount restructuring undertaken in the first half.
Currency weaknesses remain a factor in both Brazil and Argentina that benefit us for now. As you can see, the last 5 years have been a bit of a journey. From 2,030 to 2,050, we were really restructuring the way we do business, stripping out waste and duplication and engineering our CapEx numbers lower without sacrificing optionality. 2016 2017 were reinvestment years as we made positive improvements at our key international assets that we believe would yield systemic long term improvements. And this year, we're starting to reap the benefits of that long term approach with the investments starting to yield results and our operational excellence program starting to kick in.
If you turn to Slide 14. So let's look at what we got for this reinvestment program. I'm not going to go in all the details, but you can see from the slides that there are value improving initiatives that have either been delivered or underway across the portfolio. Sonora's Dame has been a champion asset from this perspective, where we see both brownfields opportunities and value enhancing initiatives that are in the process of being realized. Ibali is also starting to kick Idiopremus motoring along nicely.
And into next year, you'll see the combination plant project at Seguri, giving us a production and a margin benefit. Brazil will be the next key area of focus for us, where we are busy with all reserve development, optimization of underground mining sequence and productivity improvements. While in Argentina, we continue to explore the possibilities around extending the mine life while repacing costs. Turning to Slide 15. In addition to the inward investment taking shape, operational excellence work continues with more than 338 individual enhancement projects checked through a project management system as we strive to not only reimagine what possible from our portfolio, but to start seeing meaningful move down the cost curve.
This has been an issue step change driven by actively working to prioritize sustainable cash flow improvement at every level of the business. We are drastically improving mine planning and forecasting and you can see those results from the improving persistency in our reported performance. And an important ingredient is our approach to data analysis and benchmarking against similar better performing assets across the global sector. This is a key tool used to discover opportunities and identify best practices. The benefit of this work is what you're starting to see.
That is only at the very beginning, which is a redefinition of our asset potential, further entrenchment of our already strict capital discipline. Slide 16. The benefits we expect to achieve for 2018, rough and beyond the proved plans for the year, I'll set out in the last column of this slide. As you can see, we have made considerable progress on our OE-eight hundred efforts, not by trying to fund the silver bullet approach, but in reaping the aggregated benefit of number of initiatives, which together elevate the overall asset performance. We have already banked part of the benefit of these figures you see on the right And I have high confidence that we will at least achieve those over the balance of the year.
And with that, I will hand over to Chris for the Soudaifi business.
Thank you, Ludwig. If we can turn to Slide 18. In South Africa, we started the Q2 with a smaller and more focused footprint. Mponeng continues strongly with production increasing 12% year on year to 119,000 ounces as the mine improved mining practices together with higher REIT values. This is our flagship mine in South Africa, which we are working on developing to reach its long term potential through the mine life extension project.
The project has unfortunately experienced some delays over the quarter due to the fatal accidents as alluded to by Venkat early on, which occurred in April. This fatal accident caused a delay in the all reserve development and also had an impact on the construction activity to a lesser extent. We are however hard at work to ensure progress in this project. On the technology innovation project, this has been scaled down in line with the accelerated closure of the Tautona mine. We'll continue to establish the site for the high strength backfill plant at Mponeng mine, and it is estimated the plant construction will now commence in the second half of the year.
At surface operations, Mine Waste Solutions saw pleasing 4% improvement in plant recoveries, assisting production as the operations reverted to normal production levels compared to the first half of twenty seventeen, which was impacted by significant weather storms. Costs in the region were impacted by power, annual salary increases and the stronger rand against the dollar. The work to further reorganize this region in our portfolio continues as we optimize our cost base to fit the smaller operating footprint, and we are encouraged by a stronger year on year performance from our retained assets. In quarter 3, we aim to conclude the current Section 189 process and hopefully finalizing our wage negotiations and returning South Africa to its positive cash flow in quarter 4. Turning to Slide 19.
Work is underway to ensure that cost structures are refi ed appropriately for the now smaller footprint. Our focus is to responsibly create a South African business that can be profitable on a sustainable basis. We plan to do this by simplifying the operating model, reducing the surface footprint by pursuing commercial opportunities along with the rehabilitation of unused infrastructure And then finally, completing the dialogue that's currently ongoing under the Section 189 process.
I'll now hand over to Graeme.
Thank you, Chris. Today, I'll cover our key projects and make a few comments on exploration. As Ludwig has already outlined, Kibali delivered an excellent result for the quarter and for the first half. The underground ramp up and continued improvements in throughput and recovery helped boost production to a record 202,000 ounces on 100% basis, a 17% increase on the Q1. Cash costs decreased by almost a third to $645 an ounce.
For the first half, production was 374,000 ounces, a 32% year on year increase at cash costs of $6.99 an ounce and all in sustaining costs of $8.76 The final element of the original project is the 3rd hydropower station at Azambi. Commissioning has commenced and the power station will be fully operational in the 3rd quarter. Total hydropower capacity is now 40 megawatts and can provide most of the mine's power requirements. Turning to Slide 22. In regard to Obuasi, a Ghana parliamentary environmental permits on acceptable conditions.
The environmental permits on acceptable conditions. We had also previously agreed a reclamation security agreement, which defines the scope and the costs for the rehabilitation of this 120 year old mine. This is also ensured that there is no change to our reclamation liability and the related funding requirements. With all these approvals fully in place, we are now ramping up the implementation. The project continues to target 1st gold by the end of 2019 and ramp up to commercial production at the end of 2020.
Most of the key construction management roles been recruited. Detailed design is progressing. Our process flow diagrams and design criteria are being finalized. And preparation of the 1st contracts for demolition and for housing refurbishment of a construction workforce is well advanced. Establishment of the operating management team is also well advanced.
And through to our values of maximizing opportunities for Ghanaians and recognizing the country's long mining history, we are providing every opportunity to our current care and maintenance team and other Ghanaians in country and globally to be part of the redevelopment. I've explained before that the objective is to establish a modern mechanized mine, getting the right culture and systems and processes in place is key to this objective and we won't be compromised in our resolve to that effect. We are making good progress on this, leveraging from Sunrise Dam and from the Tropicana operations. We are well advanced on the underground mining contract. Following a thorough process, a seventy-thirty joint venture between African Underground Mining Services and Rockshore International, a Ghanaian mining contractor, is a preferred contractor for delivery of the underground mining services.
Negotiation of the final contract terms and conditions are well advanced with an expectation that project works will commence later in 2018. The joint venture has been incorporated in Ghana and will trade under the name of Underground Mining Alliance Limited. We are very pleased that through this JV, the project is achieving real and meaningful Ghanaian participation. AngloGold Ashanti has purchased the mining equipment. Orders have been placed and equipment has already started to arrive in Ghana.
Turning to Slide 23, the Suguri Hard Rock Project is a high return brownfields project that extends Saburi's mine life by 6 years with annual gold production of approximately 300,000 ounces per annum and with further upside potential. The project remains on schedule. The milestone of completing the CIL circuit has been achieved. The grounding circuit commissioning and new power plant are on track for quarter 4 this year. Now, turning to exploration.
As our annual exploration budget of $130,000,000 approximately 20% is focused on greenfields. Greenfields exploration is focused in Australia around Sunrise Dam and in North Queensland. In the U. S. In the north and eastern part of Minnesota and Nevada and in Argentina.
Generative and tighter generation work is currently in progress in Brazil and West Africa. Strategically, we also use a portfolio of small holdings and earning deals to supplement our in house capacity. Examples are the farm in agreement with Saris or Butchers Well near Sunrise Dam, the Silicon Prospect in Nevada with Renaissance Gold, our 18% shareholding in Corbus Gold and our 16% stake in Pure Gold. The balance is invested in mineral resource and reserve replacement at our mines and projects. There is a strong focus on the sites with shorter mine lives based on ore reserves.
Turning to Slide 25, a good example of this is Sunrise Dam, where the reserve life is 5 years, but the expected mine life is much longer. This slide shows a cross section of Sunrise Dam. Sonae's dam remains open in all directions to the south, the north and that depth. The scope for a long life mine is clearly evident. The Vale domain is the largest ore body and drilling is showing multiple shears which control the mineralization.
The Midway Shear Steeps is a new high grade discovery with widths of 3 to 22 meters at grades ranging from 20 to 2 30 grams a tonne. Future production areas include the Carri Shear below the Vogtle ore body and the Cosmo area to the east. On Slide 26, the team have put in place a clear program to explore and progressively expand the mineral resource and bring these into reserves. The application of underground RC drilling, relatively new technology underground has provided a fast, effective and low cost alternative to diamond drilling. Converting the resource to reserve is expensive and in itself does not add value.
The diagram illustrates ATA's strategy. Exploration is programmed in advance of reserve definition, which is an advance of grade control leading to production. We aim to keep a balance. In this context, one should not judge the mine life of Sunrise Van by the ore reserve, but by the resources and the endowment potential. On Slide 27, AngloGold's ore reserve additions by our international assets have outperformed the other 5 largest gold producers in the percentage of sites with the same or larger oil reserve at the year end 2017 as compared to 2014.
And on Slide 28, you've seen the slide before, but it bears repeating that mine lives generally extend beyond the published ore reserves. During a mine's operation, a combination of brownfield exploration, resource conversion, operational excellence, non optimization and price can extend to life considerably compared to that based on the ore reserve at a particular time. There's even more the case for underground operations. The chart demonstrates that at several of our operations, the expected mine life is doubled or more than that based on the published ore reserves. Lubbock has run through the brownfields projects in some detail, so I won't repeat them.
But suffice to say, they have created the platforms of those assets to realize the extended mine life profile. Thanks very much and I'll pass on to Christine.
Thank you, Graham. Good day, everyone. As we've heard from Benkad, we've had a strong first half underpinned by solid operational performance and good cost control. Our balance sheet has strengthened on the back of improved free cash flows, the South African sale proceeds and a continued focus on capital discipline. We're on a positive trajectory for the rest of the year and I'll conclude on the outlook a bit later.
I'll now move on to the detail of our first half performance. Moving on to slide 30. Our half year financial performance is very pleasing, which benefited from improved operational performance and efficiencies, good cost control and a 6% higher gold price year on year. Total production declined by 7% compared to last year. However, on a like for like basis after stripping out the sale of Mohave and Copernang, as well as adjusting for the closure of Taitona, we show a healthy uptick in performance from retained operations of 4%.
Both our all in sustaining costs and all in cost metrics improved on last year despite 3% higher cash costs. I will unpack the cost detail in a little while. Adjusted EBITDA of CAD 7 22,000,000 for retained operations, which excludes impairments, retrenchment costs and other defined items was 22% up on last year. The increase in the tax charge compared to the prior year reflects the overall improved profitability of the business. Free cash flow improved significantly compared to last year with CAD19 1,000,000 free cash flow generated for Q2.
Excluding the once off restructuring costs for the South African region and the working capital lockup, we are at free cash flow positive for the first half. The improvement in free cash flow was underpinned by the improved operational cash flows, lower capital expenditure and positive working capital movement. As Ludwig mentioned, sustaining capital particularly in the international operations last year reflected the peak of our inward investment program which is starting to deliver benefits. As planned and aligned with our past trends, we expect capital expenditure to trend upwards in the second half. However, we've already banked some capital savings relating to the earlier conclusion of the South African asset sales, the operations excellence initiative and favorable currency effects.
In addition, working capital movements positively impacted free cash flow due to lower inventory levels and lower prepayments on long lead capital items despite the CAD 29,000,000 increased VAT lockup in Tanzania and the DRC. We have been able to offset some of the historical VAT in these regions and our efforts in this regard continue. Finally, an additional retrenchment provision was made for the South African region during the period of CAD 22,000,000 post tax that will impact cash flows in the second half. Moving on to slide 31, our consistent focus on improving margins has resulted in a solid all in sustaining cost margin through the cycle. The all in sustaining cost margin from retained operations is a healthy 23% for the first half and reflects the benefits of good cost management and our operational excellence program, which focuses particularly on the controllable factors of our business.
We've already captured significant cash flow savings relative to budget through this initiative in the first half with more sustainable savings expected in the second half. Moving on to slide 32. The 3% increase in total cash costs for the first half reflects the inflationary pressures across the emerging economies that we operate in. We also saw higher mining costs relating to the Geita underground development, the higher royalty and clearance fees of Geita and the negative impact of the overall stronger currency effect in the first half. There was however a CAD16 per ounce improvement in total cash cost in Q2 versus Q1 reflecting the improved operational performance.
This is expected to improve in the second half with the Kibali underground ramping up, Sunrise Dam recovery enhancement project improving productivity, the Brazil recovery in the second half and the South African region completing its restructuring. The total all in sustaining costs at $10.20 an ounce and 1.05 dollars an ounce all in sustaining costs for retained operations reflects an encouraging lower trend compared to last year. This was primarily driven by lower sustaining capital where some operational excellence savings have been planned. All in sustaining cost at CAD1269 an ounce for the South African retained operations was 9% higher due to inflationary pressures despite a 7% stronger exchange rate, given that there are fewer units of production absorbing the overhead. All in sustaining cost for the international operations at CAD9.48 an ounce was 4% lower which was underpinned by a strong operational performance and lower sustaining capital which more than compensated for the inflationary pressures.
Moving on to the balance sheet on slide 33. Our net debt of CAD 1,800,000,000 at the half year fell by 17% from last year due to sales proceeds received on the South African assets and improved free cash flows. The net debt to EBITDA ratio at 1.1 times is the lowest since 2012 and reflects ample headroom to our 3.5 times covenant providing the flexibility required in the current volatile economic climate whilst positioning the company to remain self sufficient with regards to its low capital, high return, reinvestment opportunities and to sustain our annual cash dividend. Going forward, we expect our positive cash flow momentum to continue benefiting from efficiency improvements as well as from our leverage to gold price and currencies. We have ample undrawn facilities and long dated bond maturities.
We plan to commence the refinancing of our U. S. Dollar and Aussie dollar RCF facilities in the second half of the year. The refinancing of the South African RCF facilities were completed last year. Our credit ratings remain intact.
Finally, concluding on the full year guidance on slide 34. Our guidance contains the usual caveats relating to any labor power or other disruptions. We are on track to meet the full year guidance where we expect production at the top end of the guidance range, taking into account the improved production performance at the half year and the expected uptick in production at Kibali, Geita, Australia and Brazil in the remaining two quarters with a heavier weighting expected in Q4 for the latter three operations. The improved operational performance was boosted by the operation's excellent focus that is expected to further benefit costs, which are trending towards the lower end of the guidance range. Our currency exposure across our various operating geographies continues to provide a natural hedge to inflationary effects and to the volatility in the gold price.
This diversification does differentiates us from the majority of our peer group and gives us the resilience in what remains a volatile market as we continue to realize currency benefits in more than 2 thirds of our portfolio. We remain sensitive to changes in both the commodity prices and currency and the estimated impact based on the assumptions provided on all in sustaining costs and cash flows are provided with a health warning. Capital expenditure is expected to increase in the second half, although as I mentioned some capital savings were banked in the first half and we reaffirm our capital guidance provided at the range of CAD800 1,000,000 to CAD920 1,000,000. Sustaining capital comprises 70% of the total capital expenditure. The expected increase in the sustaining capital in the second half relates primarily to South Africa, Continental Africa in particular at Geita and the Americas.
Of the CAD200 million to CAD250 million in project capital, Abuwati comprises CAD102 million which will largely be spent in the second half as the project gains momentum. We also have the Siguiri combination plant in at CAD78 1,000,000 and that project as Graham mentioned is expected to be completed by the end of the year. The balance is made up of CAD11 1,000,000 at Kibali and the completion of Mponeng Phase 1 in at CAD9 1,000,000 I will now hand over to Binkett to conclude.
Thank you, Christine. As you all know well, we have named Kelvin Dushnitsky as my successor and he will be taking up his role at the start of next month as the Head of an experienced and well established executive team. Kelvin is a great fit for us with a very good working knowledge of the market, of our strategy and the work we have done on margin and efficiency improvement and strict capital allocation. I expect the transition to be seamless and I wish him only the very best in his new role. Turning on to the penultimate slide, no prices for guessing what the focus areas for the balance of the year are and where our work is clearly cut out for us.
1st, a firm focus on safety tops the list as always. Secondly, supporting Ludwig and his team in embedding the operational excellence plan is something Kelvin has also indicated will be his priority. 3rd is ensuring that we don't miss a beat on executing the Abuasi redevelopment project. Chris is in the middle of a clear plan to restore the remaining South African asset base to profitability, which is critically important for its long term sustainability. We continue to engage with our host governments in Tanzania to get greater clarity over the legislative changes there in the context of our mine development and stability agreements, given the uncertainty that exists in the market over the resource sector there.
I am hopeful that those discussions will be productive. Likewise, working alongside our joint venture partner in the DRC to arrive at a mutually acceptable terms with the government given the stability previously granted and the benefits conferred to mining companies that operate in landlocked infrastructurally challenged provinces such as ours. And finally, as Graham has laid out, we have an exciting slate of brownfields projects, which we'll need to deliver to plan and there is no margin forever. Turning on to the final slide, Slide 38. As you know, this is my final presentation after around 72 quarters with this company, the last 22 as its CEO.
If you'd indulge me, I thought I'd reflect on some of the work we have done over that time to reposition this company to not only survive the gold price storm that came at us back in 2013, but also thrive in a range of market conditions. You see our dogged focus on margins and on coaxing the best out of our assets through targeted investment and operational excellence. As you have heard a number of times here today, this has helped bring down cost by more than a 5. In doing that, we have kept all of our options largely intact, which means we are not staring at a production cliff anytime soon. The business is safer.
Building on the work done for many years, we have continued to focus on reducing not only fatalities, but injuries that occur in the workplace. The widest measure of workplace accidents, the all injury frequency rate is 28% better than it was, but clearly there's more work to be done in this area. The business has been significantly derisked. Net debt was down almost half from its peak, despite the fact that we had to self finance the entire construction of 2 new mines in Kibali and Tropicana. We achieved that deleveraging from internal sources only through good old fashioned cash generation and some asset sales with no, I repeat, no dilution to shareholders.
Either way, the stronger balance sheet makes the business more resilient. Over this entire period, we've been delivering a consistent operating and financial performance, meeting our guidance every quarter and every year in a volatile business environment. And finally, one of the two measures of the health of the business is the productivity metric, which has marched steadily upward during this period. Thus even before the sale of some of our more labor intensive South African assets earlier this year. We have some truly talented miners and engineers in this business who have continued to look for opportunity to do more with less and have invariably come up with the goods consistently.
We are producing 58% more gold per employee costed than we did 5 years ago. And if there's one thing you can take from today's presentation is that there's more from where that came from. I'm truly honored to have served as CEO of this great company for the past 5 years. And given that I'm a shareholder, can make sure I'll be glued to the news of its success in the months years to come. I thank you all for your interest, your support and in many cases, your guidance and probing questions over the years as we have come to grips with doing the often unglamorous and boring work of building a self sustaining gold company in what appears to be a perennial bear market that is poised to deliver value over the long term.
With that, I'll hand over to the operator for questions.
Thank you very much,
sir.
Sir, we don't seem to have any questions from the lines.
Judith, I have one
We do have a question from
Thank you.
And that is David Horton of CIBC. Please go ahead, sir.
Good morning, everybody. I think there was a technical snafu there. I had to dial back in. So Venkat, thank you very much for your last quarterly update. Best of luck for the future.
My first question, I guess, is for Christine. You ran through some of the CapEx expectations for this year, and my particular interest here is looking at the spend at Obuasi. Can you just run through what your expectations are for the balance of the year at Obuasi?
So David, I'll just say that for the full year, we've got $102,000,000 spent for Wafi and most of that will actually be spent in the second half. There was about $4,000,000 spent in the first half. So as you can see, as the project gains momentum, the balance is really going to be spent in the second half of what we. And it seems
like Yes, okay. So that's slightly below previous expectations. And clearly, it's because of slow start there. What would you think the CapEx spend might be in 2019?
I think overall, we've always said of the CHF 500,000,000 capital, 20% in the 1st year, 55% in the 2nd year and the balance in the following year. And that's pretty much what we expect to spend next year.
Okay. So after a slow start, the momentum really starts to pick up and it continues on. That's correct, David. All right. The other slide in the presentation deck I found quite fascinating was on Page 28.
Now, Graham had spent some time talking about the upside at Sunrise Dam and we had the session about a month or so ago to get a better understanding of it. I guess my question on this slide would refer to Gata. You've only got a relatively short life on reserves, but you're targeting something like a 12 year planning life. I presume that that is an underground expectation at Geita.
David, is the pig sticking? Yes. Actually, that's the underground. And as we're ramping up at this moment in the underground exploration that will increase over time. So you will see that 2.3, I think it's 2.3 years will strip to longer reserves or larger reserves.
Okay. And with the underground ramp up, where do you see the underground throughput going to In excess of 1,000,000 tonnes per annum, what would you target?
Well, if you don't see the current throughput because with the underground mine typically it would be offset of the open pit throughput. So we're looking at more or less same kind of ounces, maybe a little bit lower ounces, but obviously coming at higher grades. So the throughput will be where we are at this moment around 5.5 would be closer to a 3,000,000 tonnes, where we actually would show down the frac mill and only use the ball mill on the mine.
So the underground has got potential to feed 3,000,000 tonnes per annum by itself to the mill?
That's what we're targeting.
Okay. And when would you expect to be able to get to that 3,000,000 tonne per annum rate?
Well, that's we're looking at around 20, 2021. And it all depends because we're still continuing with our open pit exploration program. So that can change depending on if we find any open pit resources. And at this moment, I must say it actually looks quite promising.
Okay. And to get to that kind of throughput rate, quite a lot of development, I would expect, would be required to get the number of phases to produce 3,000,000 tonnes per annum. What sort of development CapEx would you be envisaging?
Well, it's typically what we're looking at this moment, and that's why you can see the ramp of our in the Gata mine. So typically yes, anything between $60,000,000 $90,000,000 I would say in total.
Okay. So that's €60,000,000 to €90,000,000 through to 2021?
It will take it down by end of 2020.
Okay. And the kind of grades that you'd expect at that kind of throughput rate, the
grades that
we've been seeing recently are in the 5 gram kind of level, although the reserve grade or adjusted reserve grade, I guess, is getting closer to 6 grams. Would you be taking some dilution to be able to get to that 3,000,000 tonnes per annum?
Yes, yes, we will. So there will be a range and depending on which foot you are, obviously in Yangkeng, but this grade and we'll be actually opening up new portals at this moment. So it will range anything between 5 to 6.5 grams depending on the timing as well where we are. Maybe more of 4.5 grams to 6.5 grams as we progress through the different areas. Okay.
Yes, that's quite a different kind of mind to what I guess we've been envisaging previously.
Yes. It's a great investment in Sunrise Bank.
Yes. All right. I'll just leave it there for someone else.
The next question comes from John Demarcus of John Demarcus Independent Research.
Thank you very much. Do you anticipate any significant changes as Kelvin succeeds. Barrick's Chairman likes what he calls Tier 1 gold mines over 500,000 ounces with very low costs. Of course, your largest mine gated doesn't quite reach that threshold. Do you mines is too much of a management challenge?
I'll take that one actually, Thomas. In terms of your question, really it's one for Kelvin, if I may. But certainly, Kelvin is aware of our portfolio. We have actually slimmed the portfolio down from 21 to around 13 core mines. In reality, I do know that Barrick went on a particular strategy to sort of focus it based on 607 key assets of large scale and cash flow, but that is up to Kelvin in terms of what he wants to do in terms of the portfolio.
But certainly, he is aware of all the brownfields options, which are within our portfolio. Certainly, in terms of Brazil, likewise in terms of various parts in Africa and Australia as well. But to be fair, I'd rather he answer this question in the next conference call in a month's time or in 2 months' time.
So we don't seem to have any further questions in the queue. Do you have any closing comments?
There's nothing from our side. Operator, once again, I can thank everyone on the call for the support they have provided and certainly wishing AngloGold Ashanti many years of prosperity ahead. Thank you.