Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti 2022 year-end market update. All participants will be in 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 for an operator by pressing star and then 0. Please note that this call is being recorded. I'd now like to turn the conference over to Mr. Stewart Bailey. Please go ahead, sir.
Thanks, Claudia, welcome everybody to our full year results for 2022. You have on the line Alberto and Gillian, who will be giving the presentation, and the executive team also in support. I would ask you, before we get into the presentation, just to look at the safe harbor statement at the front of the presentation. It contains important information regarding forward-looking statements that may be made in this presentation. It is important, and you should read it. I'm going to hand over without any further ado to Alberto.
Good day to all, and thanks for joining us. Before we get into the detail, let's look first from a high level of how the year went. It has been a period of significant progress. We have in place an operating model to suit our business and the right people in key roles across the business. We've delivered on our production and cost commitments to the market and have begun to regain cost competitiveness versus our peers. We're starting to see progress in a number of places which confirm we're on the right track. This is a testament to our focus on execution and the success of our inward investment program. You can see in our grade improvements in particular, cash conversion is much better and so is our cash flow. Importantly, we're seeing strong ESG performance. Safety continues to trend in the right direction.
That's down to a clear safety strategy that emphasizes risk awareness and a clear set of controls to manage the most important risks. Our Total Recordable Injury Frequency Rate was 1.26 injuries per million hours worked. That's a marked improvement year-over-year and less than half the ICMM member average. Crucially, we have no fatalities at our managed operations. Let's look at our key milestones. Free cash flow was up fivefold to $657 million. Free cash flow before growth capital, the metric on which dividends are calculated, was close to $1 billion. Mineral reserves increased 3.5 million ounces pre-depletion. That gives us additions of 12.12 million ounces over the last three years. We progressed our reinvestment across the portfolio, with Geita again delivering strong upside. Our balance sheet is robust.
Liquidity is strong at $2.5 billion, even after acquisition and dividends. Turning to Nevada, we have maiden mineral resources at North Bullfrog, Mother Lode, and Sterling, which we acquired this year. Obuasi met production guidance of 250,000 ounces. Phase III is on track for year-end completion. We also set a target of 30% reduction in our Scope 1 and Scope 2 GHG emissions by 2030. We've declared a final dividend of $0.18 per share, taking the full year payout to $0.47 per share, or around $200 million. On highlights, we've committed to getting the basics right, and that's what you will see here. We've delivered strong year-on-year improvements in production. We estimate inflation running at about 12%.
The impact of the high inflation around the world impacting AGA at around 12% is 2022, and we have limited the cash cost increase to half of that. In other words, we were able to reduce in real terms our cash cost per ounce in about 6%. That was helped by higher grades, better planning, efficiency gains, and fewer stockpile drawdowns, which helped offset that inflation. Underpinning all of that is our inward investment drive, which is starting to bear fruit, especially at Geita and Iduapriem. All-in sustaining cost was marginally higher, with improved production offsetting higher cash costs. PSF compliance capital remained a factor, accounting for $31 an ounce of our group AISC.
Pre-cash flow was stronger, as mentioned, even after investing CapEx of $1.1 billion into our assets, investing $517 million in acquisitions, and paying $203 million in dividends. Our balance sheet is solid, with low gearing and very strong liquidity. Obuasi made good progress during the year and achieved its production and cost guidance. Gold production was 250,000 ounces at a cash cost of $914 an ounce, well below our average, even before it's fully ramped up. So far this year, we have been achieving more than 4,000 tons per day. Phase III will continue as planned through the end of this year, setting up us for the ramp up to 5,000 tons per day and eventually well over 6,000 tons per day.
Iduapriem's production was higher as we treated higher grades from Cut Two, driven by our reinvestment in this asset. As a result, cash cost improved by about 10%. Siguiri's production was higher. This despite a 10-day stop in July related to employment-related protests. Cash costs saw the impact of higher fuel costs, stockpile movements, and a much stronger Guinea franc. We're starting to see the benefits of the Full Asset Potential program at Siguiri. We have mobilized a second contractor to deliver higher volumes of higher-grade oxide ore from block two. We have renegotiated key contracts of fuel and consumables, which will help control costs. Geita recorded another strong production result, with production exceeding 500,000 ounces for 2022. Higher volumes and grades drove performance in H2.
We're reaching the end of the reinvestment program, and Geita is now back to operating above 500,000 tons per annum. Kibali's production in Q4 rebounded relative to Q3, also driven by grades and volumes. I mentioned before, Obuasi had a strong finish for the year. Phase III, the Kwesi Mensah Shaft shaft remains on track to meet the K1 2024 deadline. The bulk of the work was focused on commissioning the first KMS winder to allow material to be hoisted from 4,400 level.
In 2022, we achieved the following milestones: hosting via the Kwesi Mensah Sh aft, rock shaft in November, pumping to drop the water level below level 50, commissioning the material handling systems from 44 level to surface, completing the new vent shaft, which was critical to KMVS pilot hole, with reaming starting in December, progressing the Kwesi Mensah S haft to the 44 level. The next key project milestone include completing the new ore pass, followed by rail construction and establishing a new pump station on 50 level. Latin America. We also saw some encouraging improvement from Latin America at CVSA and Serra Grande. At AGM and ArcAO, we had to manage plant throughput to keep within permitting tailings limits. Our TSF investment in Brazil over the last 2 years has amounted to $221 million.
You would have seen in our disclosure last week, we suspended tailings deposition, the main TSFs that services the Cuiabá Mine Complex. I will speak more of this in a moment. AGM and ArcAO's production was lower year-on-year due to the lower ore volumes processed, partly offset by higher grades recovered. We completed our strategic review of CdS and have elected to retain the asset. The CdS management team will focus on rebasing the mine plan with an aim to return to a cash-neutral position this year, and to generate positive cash flows in the medium term. Serra Grande saw some benefit from higher production and lower TSF spend, and at Cerro Vanguardia production was higher, mainly driven by higher grades. In Cuiabá, as you know, there has been a raft of new tailings-related legislation and regulation introduced in Brazil over the past 4 years.
Last year, additional TSF regulation was introduced, which, among other things, required a new detailed risk assessment to be conducted on all using internationally recognized methodology and facilitated by an independent expert. In our case, the assessment group, led by this independent external expert and comprising internal and external specialists, applied Canadian stability standards to our TSFs with respect to post-liquefaction factor of safety. This is now becoming common practice. A recommendation from the risk assessment has been to buttress our Calcinados TSF to bring its post-liquefaction factor of safety up to Canadian standards. To be clear, Calcinados is safe and structurally stable and in line with a recent assurance assessment by independent data's experts and the company's own TSF team. The facilities factor of safety in both drained and undrained state are fully compliant with the relevant regulations. What are the next steps?
When we complete this buttressing, we will stop the position of filter tailings on the TSF and also processing of concentrate at the CdS dam. Information on the timeline for the completion of this buttressing is expected to be provided after engineering and geotechnical by independent tailing experts when it's complete. In the meantime, mining of ore is continuing at both mines. During this period, we expect that the site will continue to extract gold from the gravity circuit at a rate of 5,000 ounces on average per month, and we produce gold in concentrate at an average of approximately 10,000 ounces per month, with options being assessed to sell gold concentrate in the future. Sunrise in Australia. Sunrise dam's production was marginally higher. We saw inflationary pressures across the spectrum: mining and maintenance contractors, labor, and also diesel, explosives and consumables.
The full potential initiatives at Sunrise are starting to bear fruit, however. Following establishment of the underground workshop, jumbo availability has increased. This has led to an increase in development rates and mining flexibility. By year-end, analyzed undergrounding mining volumes were up 8%, and the plant recovery rates have improved by 2%. PFS work related to the potential Cleopatra that was one of the big NPV impacts of the Full Asset Potential review are ongoing. We have already declared resource on the Cleopatra pit by 750,000 ounces, and we expect to declare reserves sometime this year when that work is finished. Tropicana's production was up 15% on higher grades and tons processed. That helped us achieve a 21% cash cost improvement year-on-year.
Havana West stripping continues to progress. The timeline is under pressure due to shortage of skilled operators. We've also commenced a PFS on an underground mine at Havana. Talking about exploration. Exploration is foundational to our business. Last year, we again managed to replace depletion, adding 3.5 million ounces mineral reserves on a gross basis. This slide shows exactly why we are still excited about the potential within our portfolio. We're in the midst of a program to increase investment in reserve development and brownfield exploration. This will improve reserve conversion, extend reserve lives, improve mining flexibility, and upgrade knowledge of our ore bodies. We're making strong progress. We've made cumulative additions over the past 3 years of 12.2 million ounces of mineral reserves, which have come into our inventory at a cost of $67 an ounce.
Our mineral reserve has grown 26% over the last 6 years. Given the mineral resource base we sit on, we expect to leverage this to grow reserves further. Let's break down that growth, break down our exploration performance this year. Mineral resource additions totaled 14.9 million ounces. 7.51 came from exploration, 5.1 came from the acquisition in Nevada, 2.7 came due to the economic changes, including resource price increase by $250 to $1,750. These increases were partly offset by depletion of 3.2 million ounces and other factors of 3.5 million ounces. As a result, the net change year-over-year was +8.2 million ounces.
Mineral reserve additions totaled 3.8 million ounces, 2.8 from exploration, 1 due to economic changes, including the $200 an ounce increase in our reserve price to $1,400 an ounce. That's about 18% of our increases in mineral reserves were due to these economic changes. These increases were partly offset by depletion of 2.9 million ounces and reductions due to other factors of just 0.3 million ounces. As a result, the net year-on-year reserve change was positive in 0.6 million ounces. At Geita, we're extending the reserve life remains a priority or has been in the past. We have added 1.5 million ounces of reserve redepletion, bringing the total added over the last three years to 3.7 million ounces, currently we sit at about 7 years of life of reserves.
We continue to see further upside potential at Geita. This work has been incorporated into the asset FP project. Turning to Nevada. A few months ago, we talked about the resource endowment exceeding 10 million, that was our expectations. We have now declared 1.5 million ounces of mineral resource at North Bullfrog, 1.7 million ounces at Mother Lode, just under 1 million ounces at Sterling. At our Silicon discovery, we have added another 0.8 million ounces, bringing its resource to 4.2 million ounces. In sum, that today, at 8.4 million ounces, the what we have declared of resource in the Nevada province, we know that there is enormous potential for more growth.
We have not yet included what we consider the real gem in the portfolio at Merlin and have only scratched the surface of the Sterling land package. There's enormous potential here. Our improving understanding of the geology structure and alteration in the area is helping us identify other targets and is reinforcing our view on the potential of our consolidated ground position. Feasibility work at North Bullfrog, a smaller high return deposit, is continuing to progress. Work to date indicates that this deposit has a very low stripping ratio and the heap leach processing or selective milling can deliver very attractive returns. Permitting continues to progress, and we continue to target first production in about 2 years. We have had 6 drill rigs in actions through most of the years at Beatty and expect to double the number this year.
We expect to just invest about $50 million in exploration in the province this year. We're building a strong, experienced project, technical and permitting team. With the new additions to our land package and a more favorable configuration, our confidence in the potential of this district is growing. We're still working to consolidate our newly acquired land packages. We'll have more detail in the months ahead. As you can see in the photograph, the combined land package allows us to realize the potential of the Beatty District through systematic exploration and optimized project development. This slide shows the positioning of the Seahorse, which we believe is an extension of our Merlin ore body.
Together, Seahorse and Merlin should either work on their own or provide economies of scale to Silicon. In addition, the land package we've assembled gives us unfettered access to exploration upside potential and other benefits from consolidating a larger landholding within the Beatty District. Okay, over to finance.
Thank you, Alberto, and good afternoon, everyone. 2022 can be characterized by significant macroeconomic volatility and inflationary pressure, stability in operational performance, and a focus in cost on the things that we can control. During the year, gold price fluctuated from lows of $1,600 to over $2,000 an ounce, averaging around $1,800 across the year. The oil price increased total cash costs by $37 an ounce, with other inflationary impacts from input pricing and labor of $83 per ounce. Fluctuating foreign exchange rates, particularly in Australia, Brazil and Argentina, had a $21 an ounce favorable impact. Overall, our operational performance showed improved stability and delivery against the prior year and our internal expectations.
Production of 2.7 million ounces was 11% improvement over the 2.5 million ounces in 2021, ending in 2022 in the top half of the guidance range. Obuasi continued to ramp up, with gold production more than doubling year-on-year. Iduapriem's production was up 23% on improved ore volumes processed and higher recovered grade as we accessed ore tons from block 5 and the CVSA in Tropicana increased production by 17% and 15% respectively. Unfortunately, CDS in Brazil ended the year 12% lower following torrential rains in Q1. Higher grades lowered cash costs by $60 an ounce, while a further $41 an ounce came from favorable inventory movements. After taking into consideration the non-controllable factors such as inflation and exchange rates, cash costs were 4% lower at $1,024 an ounce.
All-in sustaining costs increased by 2% to $1,383 per ounce, while well within guided ranges and significantly below inflation. The balance sheet continues to be solid. Long dated debt maturities, low leverage and $2.5 billion in liquidity with $1.1 billion in cash on hand. Adjusted net debt of $878 million was 15% higher year-on-year and includes $694 million received from Kibali, partly offset by $365 million paid for the Corvus acquisition, $150 million for the Coeur Sterling acquisition, and dividends paid of $203 million during the year. Adjusted net debt to adjusted EBITDA was 0.49 times at year-end, half of our leverage target of 1 times through the cycle.
Cash conversion continued to improve in 2022, starting with Kibali in the DRC, we received $74 million in Q4, comprising a shareholder loan repayment of $50 million and $24 million in dividends. Our remaining share of the outstanding cash balance at the end of December 2022 was $40 million. Our share of recoverable VAT and fuel duties increased by $5 million to $86 million, net of discounting provisions at the end of December. VAT lockups in Kibali continue to be a focus. In Tanzania, total verified VAT claims offset against corporate tax payments for the year was $45 million. In Q4, the VAT receivable increased by $9 million to $153 million. New claims of $20 million were submitted, while verified VAT claims of $8 million were offset against corporate tax payments.
We continue to engage with the Tanzanian authorities regarding the mechanism to recover historical VAT accumulated between July 2017 and June 2020. In Argentina, CVSA had a cash balance equivalent of $116 million at the end of December. These funds are available to settle previously declared offshore dividends. Application to transfer a portion of these funds was made to the central bank, in December, the bank approved the release of $80 million to us. The total cash balance continues to be invested at attractive rates of return locally and remains fully available for CVSA's operational requirements. Guidance for 2023 is partially impacted by the events at Cuiabá . As Alberto has mentioned, geotechnical work is required before we understand the time and capital it will take to complete the buttressing.
In the meantime, we will produce gravity gold at around 5,000 ounces a month and ore and concentrate at about 10,000 ounces a month. We are currently assessing options on concentrate sales, and we'll take a decision based on best value. Looking at gold production for the rest of the portfolio, excluding Cuiabá , production is expected to be between 2.450 million ounces and 2.610 million ounces. Obuasi is expected to continue its ramp up to full production, with production this year expected to step up to around between 320,000 and 330,000 ounces. Iduapriem includes continued construction of the new TSF and mining from block 7 and 8. Total cash costs for the group are expected to be between $1,050 per ounce and $1,120 per ounce.
This is based on our best assessment of inflation and exchange change expected this year. We also expect a step-up in cash costs this year at Tropicana, where deferred stripping in the final cutback at the Havana pit, which has previously been categorized as growth capital in prior years, is now being expensed as that cutback moves to commercial production. The step-up in Tropicana accounts for around half of the increase in cash costs this year of $37 an ounce. All-in sustaining costs are guided between 1,405 grams and 1,450 grams. That includes sustaining capital levels, slightly above our long-term average as we continue to invest in improving reserve life, stripping programs and increased development, which together are aimed at improving the overall quality and flexibility of the base portfolio.
Total capital expenditure, excluding any capital required at Kibali, is expected to be between $960 million and $1,070 million. That includes growth capital of between $280 million and $310 million. I will now hand back over to Alberto to conclude.
Thank you, Gillian. As I've said before, 2023 remains a transitional year for us. We remain focused on making more improvements and on delivering more consistent results in line with the targets we've set out. I would, however, underscore or highlight that we are proud to have been able to reduce, in real terms, our in Sustaining Costs by 10% during 2022, and we expect to have a further reduction in real terms by 2% in 2023. Nevertheless, more needs to be done, and this is where the Full Asset Potential program is working as intended. We have basically finished most of the diagnostics and have begun the implementation phase, and we expect to see the bulk of the results in 2024 and 2025. Obuasi is on track to deliver Phase III at year-end.
We have the right people in place and the right organizational structure. We focus on improving operating and capital efficiencies. Our world-class exploration team continues to add value through the drill bit across our properties. Our technical team continues to progress our Nevada opportunity. Why AngloGold Ashanti? We have a diverse portfolio and clear strategy to close the margin gap with our peers using our Full Asset Potential process and bringing in new lower cost ounces already in the pipeline. We continue to improve our ESG practices from a high base. Our safety is among the best in the industry, and we have a 15-year track record on GHG reductions with more to come. We have true partnerships in our communities and deliver real, tangible benefit to our hosts. We have a new experience and highly motivated leadership team.
They bring diverse world-class technical expertise and experience operating across developed and developing markets. Our balance sheet is robust, with capacity to fund sustained capital needs, shareholder returns, and growth. We are focused on ensuring it stays that way. Disciplining capital allocation remains an absolute priority to us, and we have in place a clear dividend policy and leverage targets. Replenishing inventory in a competitive way is fundamental for any gold company, and we are among the best in that regard. Don't take my word for it. You need only to look at our track record in brownfield exploration, replacing our depletion, and then the new discoveries, most recently in Nevada. Our aim remains to narrow the value gap with our peers by regaining cost competitiveness. The foundation is in place, and we're working hard now to deliver. With that, we can take questions.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star and then one on your touch-tone phone or on the keypad on your screen. If you decide to withdraw your question, please press star and then two to remove yourself from the list. Again, if you would like to ask a question, please press star and then one. We will pause to see if we have questions. The first question comes from Jared Hoover from RMB Morgan Stanley. Please go ahead, Jared.
Afternoon, Alberto and team. Thanks for the call. I think it might actually be early morning your side, but I have three questions. My first two are directed to Alberto, my last question I'm hoping Gillian might have some answers for me. My first question is on Kibali. My understanding from what you guys are saying is that on a monthly basis, you'll be selling 5,000 ounces of gravity gold at spot gold prices, you might have 10,000 ounces of gold in concentrate for which you're exploring options.
How difficult is it to sell that gold in concentrates? What I'm looking for is to understand what kind of discount to spot gold prices would you have to sell that gold concentrate at? Aligned to that, it looks like there'll be another 5,000 ounces that will be a working capital build. When accounting for that working capital build, should I just be applying the cash costs at Cuiabá, and that would effectively give me my working capital build. That's my first question. My second is around your guidance. I think you've slipped out Cuiabá, and if I compare your FY 2023 guidance to your FY 2022 guidance ex Cuiabá, it looks like production is going up by about 30,000 ounces at the midpoint.
If I take a step back, it looks like Obuasi should be growing by about 80,000 ounces. That implies some of your assets are potentially going backwards. I would think that that would be at some of your Brazilian operations at CDS and Serra Grande, given those assets have been impaired. Are there any other assets in the portfolio that you can highlight for me that are going backwards? My last question for Gillian. I know it's still early, and you've only really been in the seat for about two months, but I was hoping that maybe you'd have some color around what you may have identified as easy wins at AngloGold, given that I think that you are responsible or part of a team that was driving asset efficiency programs at Rio.
Maybe if you've identified anything here at AngloGold that could potentially be an easy replication of what you've done historically. Just to get your sense of how difficult you think the Full Asset Potential program is at AngloGold, because to my mind, it looks like certain assets, like in Brazil, might carry an above average degree of risk when trying to get those assets to their full potential. Okay, I'll leave it there. Thanks.
You don't want to ask another one. Okay, let me start with Cuiabá. Look, we, this is still work in progress, as you say. We were through gravity, we can produce at about 60,000 ounces this year, is what we are assuming. What we know is that we have built the pads to store concentrate, and that we can produce in a midpoint, but that has variance too, as you saw, of about 10,000 or 120,000 ounces for the year. We are studying options. There are companies who do and sell the concentrate, we are talking in Brazil, and we have spoken with those concentrates, and we're just doing the evaluations of selling the concentrate or see when we buttress, the, when finishing The buttressing.
The processing plant had an excess capacity of about 30%, do we wait there? At this stage, I can't give you more details on cost, except that it's already being done by companies in Brazil. Regarding guidance, you are right. As you think you've done the math well. To give you an idea of how we think about guidance, if you look at the guidance we gave for 2022, well, that has some expected, the midpoint had, okay, these are what all of our operations will produce. Since that moment, we had torrential rains in Brazil in the first 3 months. COVID hit significantly the Australian operations the first 3, 4 months. Yeah, in the end, we were able to meet that guidance.
Guidance always at the midpoint will have some risk that we assess that we don't know if it can happen, but we always have to assess in mining that some risk can happen. If you, if everything is perfect, what I can tell you is that, yes, Obuasi is supposed to go up by about 70,000 ounces. I think our Australian operations may go up a bit and the rest, excluding Cuiabá, will be flat. On average, I don't see anything going down, but this is with everything going perfect. I think our guidance is correct, how we have put it. Gillian.
Yeah. No worries.
She loves Full Asset Potential.
No, look, I think thanks so much for the question. You're right. I'm only here and I know less than I know more. What I will say, and it's really quite important, is that the Full Asset Potential program or the way we're thinking about the future is not a quick fix cost-cutting exercise. You know, you sort of said, are the Full Asset Potential wins easy? We would say no, because we're looking for this fundamental shift in the way that we think about the things that we can control and the way we optimize performance. It really is about optimal performance rather than cost cutting.
We're interested in the long-term health of the business. That will require a sort of a long-term focus and that structural shift. What I can see that we can do differently in terms of performance management is really look very consistently across the portfolio at the financial performance metrics in a standardized and consistent way, really focusing on the things that we control. We're not price setters. We don't control inflation or exchange. We will be very aware of those impacts, but we're not focused on those. We're ultimately focused on the things that are in our control.
That's p roduction stability, operational performance, grade, and then fundamental cost leadership. Yeah, I think and probably the last thing I'll say is it is the primary focus, for me, and for my team. It will be, something that we will be very, very deliberate about in the coming months.
Okay, great. Thanks, Alberto. Thanks, Gillian.
Thank you. The next question comes from Cameron Needham from Bank of America. Please proceed with your question, Cameron.
Thank you. Question from me. Look on M&A, I know you previously stated it isn't part of Anglo Gold strategy sort of near term. I just wanted to get a bit of a refresh on the view given how topical this is. Is that still the case?
Sorry, Cameron, we didn't get you right at the beginning of that question. Could you just repeat, please?
Sure. Just let me know if you can't hear me. Just on M&A, I know you previously stated it isn't part of AngloGold strategy at near term, but sort of given how topical it is, I just wanted to get a refresh of the view. You know, is that still the case?
Yeah. Thank you, Cameron. It is still the case. Look, we assess. We have a team that assess opportunity, and we still find that the best way we can add value is internally. The rate of return, if you could put it, of what we're doing in Full Asset Potential is infinite because it's. For most of them, it is very little investment and very high return. I, we just don't see anything that could match that. By the way, it was a great title in the piece by your organization, Better Safe than Sorry. I thought that we're fully aligned with that. Thank you.
I appreciate that. thanks very much. Very clear.
Thank you. The next question comes from Adrian Hammond from Standard Bank Group. Please proceed, Adrian.
Hi, Alberto. Just on Obuasi, for 2024, what should we be penciling in some models for that production, given Phase III coming online? Secondly, just broadly speaking, on the operating environment, how that's gotten better or worse for you given, you know, over the last 2 years, issues with the supply chain, inflation and COVID. How is that playing out for you now? Are you finding it easier or better to manage your business? Thanks.
What we have said is that we expect at the end of 2024, we're pretty confident that we'll be hitting the annual rate of 400,000. There's still, right now, today, we still need to do a lot of things and so finish the Kwesi Mensah S haft. That finishes around the year, and then there's the ventilation. There are things you just. It's difficult to give you a very clear, you know, exact sort of number. If things go very well, we can hit that annualized sort of number by midyear of 2024, and that would take the year for about 370 or something.
If things are delayed, we will still hit the annualized rate of 400 by that, and then that will set for the following years, sort of the baseline. Regarding operating environment, it's always hard again. Right now, the situation, obviously the economic situation and after COVID, it has hit all these regions very hard, all the world very hard, but these regions in particular. We have good relationships with the government. We're continuously engaging with them. I have personally engaged in Ghana with the government, in Tanzania with the government. What we can say is that these governments understand that we deliver win-win propositions. We're good, sort of, we value the communities in which we operate. We generate local employment.
In both places, it would be between 98% and 99%. So we'll just expect to continue to see that dialogue. What I can say is that a lot of the noise that you hear, for example, there was some noise on taxes on DRC, and Barrick was very clear saying, "No, we haven't. That's not true." So we haven't seen anything like that. In Obuasi, yes, we have heard the 20%, but for us, our local spending currency is actually more than that. So up to now, what we can do is keep engaging. All these are, we believe, very good countries to keep investing.
Thank you.
Thank you. The next question comes from Leroy Mnguni from HSBC. Please proceed with your question, Leroy.
All right. Thanks for the opportunity. My questions are mostly just around your portfolio. You've had some setbacks in your South American operations recently. They seem to be the higher cost operations. It's where your impairments are coming through. Could you maybe just give us an indication of which of those assets you see still remaining core to your portfolio?
Which you are happy to let go. Just on Quebradona, an update on the environmental permits and how that's progressing. It does seem like the Colombian authorities, or at least that it's difficult to get permits through there. Just an update on Gramalote as well on that disposal and how that's progressing. Yeah, that's it for now. Thanks.
Thank you, Leroy. As you well know, we tried and we had a very long process of selling the smallest asset that is CdS. We were looking for a company. It wasn't a negotiation on price, it was a negotiation of if they had the right skills to manage an asset that has upside. We do see in all of our plans that asset having some positive cash flows in the medium term. Beyond anything, it was the ESG responsibilities that come with owning an asset like that, and we had to be quite confident that that was the case. We couldn't.
We couldn't come across the line that the companies that were interested could deliver the commitments on ESG with a high degree of probability that we were seeking. What I can tell you is there's two assets, Serra Grande and CDS, in cash would've lost quite a bit of money last year in, let's say, close to $100 million. Our expectation this year is for them to break even. If we can have them breaking even though it's a lot of management time spent on this, for now, until we have a further revision of the strategy, we just need to do the best that we can managing those assets. That could be a differentiation between last year and this year.
Quebradona, we continue to work on the measuring with piezometers and installing piezometers on the ground. That is we need to do that for many, many months, for about 12 months, to be able to prove the water impact of the project on 2 of the municipalities. That hasn't changed. It is slow. It's as you say, the government is very Let me put it, confusing in the signals that it has. It does like copper, but obviously it doesn't like mining in general. That sort of complicates a bit. We'll continue. We are continuing to With the most important sort of technical aspect to is to try to get a baseline on measuring water to then be able to go to the environmental agency.
On Quebradona, we are starting the process of that. On Gramalote, we're starting the process of selling it in this first quarter, and we expect to be finished sometime in the third or fourth quarter. That one doesn't have much ESG consideration, so I think that we would have a higher probability of success.
Thank you. Maybe just one more, please. Your All-in sustaining cost guidance range is quite narrow compared to the range you've sort of guided this time last year. Should we take that as an indication that, you know, the operating environment's getting a bit easier and some of those inflationary pressures that we've seen in recent quarters are starting to abate?
I would take it as that we are probably, if you define the difference between cash costs and all-in sustaining costs. We are getting to a place where I think is sustainable and where most companies are arriving, and that's somewhere between $350 and $400. If you look at in our guidance, at the midpoint, it's about $360, I think, and in the high point it's about $400 difference. That's where I think we will sit. If you look at most companies that have come out, that's where they are coming out in this measure. That includes not only stay in business capital, but it includes corporate, it includes exploration, Ore Reserve Development spend and others.
I you're right that the narrowness is that in that metric, I think we are feeling that we are coming to a much better sort of level.
All clear. Thank you.
Thank you. The next question comes from Tanya Jakusconek from Scotiabank. Please proceed with your question, Tanya.
Yes. Good morning, everybody. Thank you for taking my questions. I just wanted to circle back to Brazil and the tailings work that you're doing. Maybe Alberto, can you give us an update or a better timing as to when all of these studies are going to be completed, or is this sometime in 2023? When they are completed, are we expecting obviously additional capital above and beyond what is provided in the guidance for these tailings? I'm just trying to understand whether you've captured some money for it in 2023 guidance, or can I expect more to come?
As probably mentioned previously, we haven't completed the engineering studies. Without that, we can't really give you estimates of cost or timing. It is a months thing. It's not a years thing. It is buttressing. Buttressing means putting rocks at the base of the dam. It will obviously increase CapEx, but in the scheme of things for AngloGold Ashanti , I think it will be quite manageable. Our guidance excludes all those numbers because we don't know. The guidance we gave on CapEx, it excludes that.
No, I just I'm trying to get a sense of timing. Do you think by the Q1 conference call, you'll be able to provide us more insights into this? Into the capital?
I will certainly give you more insights. I don't know if by then the engineering study, but we'll certainly give an update on Q1. If it's not in, obviously, if we can't give more details, certainly by Q2, we'll have significantly more details. I just don't want to time myself because I can't time myself to what I don't know. It is a months thing.
Okay.
Between Q1 and Q2, you should have much more details.
Okay. That's helpful. Thank you. Maybe going on that, I noticed that in your priorities, key priorities for 2023, you have provide two-year guidance. I thought we were expecting 2024 guidance with year-end reserve, year-end financials, i.e. When you talk about provide two-year guidance in your 2023 key priorities, what exactly do you mean? Will we sometime in 2023 be getting two-year guidance? You know, maybe if you can expand on that would be helpful. Thank you.
Yeah, you're right. Our plan right now is to give more color in real terms. I can tell you that it's just inflation complicates life enormously for everybody. We will begin to give some guidance in May of this year for 2034.
Okay. Also with your Q1.
It will be related to the impact of Full Asset Potential and cash costs. At this stage, we will give more details in May, we are expecting... Let me talk a bit about Full Asset Potential and because it is applied to this. In our current guidance, we already have about $40 per ounce included of improvements because of Full Asset Potential. That is what allowed us to compensate for the very significant increase in Tropicana. We expect to have a further sort of impact of Full Asset Potential of about $60 an ounce either this year or in 2024.
That would if we can deliver that, and we need more details, and we will provide that in May, that will significantly advance our objectives of continuing to reduce the gap between ourselves and our main competitors. That's what we're thinking right now. It's around that a further additional $60 an ounce coming from Full Asset Potential. We will have cash cost ranges and production ranges for 2024 in May of this year. It will be something around this.
In May of this year, we would get a production number for 2024, a total cash cost, all-in sustaining, and a capital number, so four new numbers in May?
I think, at this stage, yeah. We should.
Okay. Great. That's helpful. Maybe just my final question, if I could. Just as you see the year progressing, how should we think about the production and cost distribution on a quarterly basis? Obviously, with the ramp-up to Obuasi, I'm assuming that Q4 second half is going to be better than the first half. I don't know how your capital spend is going to be. So maybe yourself or Gillian can provide some sort of, you know, high level guidance for the quarters for, you know, both production and costs. That would be very helpful. Thank you.
Look, you saw last year, the increase between H2 and H1 production is massive. I don't think it's going to be as inclined as that, certainly, we would expect a higher, sort of a grade, a gradient of, so higher H2 than H1. In terms of CapEx, that's always an issue, we will try. We are trying internally to smooth it out much more than we have done in the past. Maybe I would say a 55, 45 or something like that distribution.
45 first half, 55 second half.
Yes.
-for production?
Yeah.
Okay. And then obviously-
No, no, no. That is for CapEx.
cost based on volume.
For CapEx.
Oh, for... Okay.
For CapEx. For production.
I'm sorry.
I think the gradient is much more inclined because of Obuasi.
Sorry, I didn't understand that.
Sorry?
Sorry, I didn't get that. I had a bad connection.
What I've said is the guidance on CapEx that you asked of 55, 45. On production, we're not giving numbers, but we're saying that the H2 would be higher than H1 just because of Obuasi still ramping up from 250 to 320. We usually have, in any case, a higher H2 than H1.
Great. Thank you so much for taking my questions.
Thank you. At this time, I'd like to hand over to Mr. Bailey for questions from the webcast. Thank you, sir.
Thanks, Claudia. I think, with apologies to everyone who sent questions in, many of them have actually been answered already. If you'll forgive me, I'm just gonna go to the ones that haven't. From Arnold van Graan, at Nedbank. He says, "AngloGold's portfolio is widely spread over many jurisdictions. However, in some of these countries, your assets lack in-country scale. This lack, of scale could be an impediment to becoming truly cost competitive at these assets even after implementing the new operating model. Do you have long-term plans to address this, and how? Does that imply that longer term you may need to bulk up or sell out on some jurisdictions?
If I see our portfolio, I would think about 70% or something would be of the scale that we would want. There are others. Basically, the two Brazilian ones, I would talk, Serra Grande and CdS, that are subscale. They are 100,000 ounces. Cuiabá is actually, we never disclose it separately, but right now it has this issue, but it is actually a very good asset. It's a 250,000 asset, and it's in normal terms, its cash costs are around $900 of cash cost. That's one that in the long run, obviously, we would like to keep.
The issue that I have is we did try to sell CDS, but if you look at the history of AngloGold Ashanti, it has sold so much, and you can't continue to shrink it to greatness. The best that we can do is run them the best that we can, and then we see. I've sort of outlined a strategy for the next, it was three years, and now it's two more years, 2024 and 2025, and then we see. That's basically how I have put it. Right now, we do have. It's not a complicated operation. We have about only 10 owned, managed operations and one JV. It's, compared to other companies out there, and it's actually quite manageable. They are few assets, and they're basically located in, yeah, three, maybe four jurisdictions.
Your point is clear. On average, we have the average scale is lower than the big ones. That's what I've said, that we can never really seek to have the same cash costs as bigger players, but we can get very close. That has been the aspiration: get within two digits. Just to remind, about two years ago or three, we would have been about $250 an ounce difference. I think right now we don't know how inflation is gonna affect them, but my gut is that we would be about $170. With what we're doing in full asset potential, we should get within two digits. High two digits, but still two digits.
We can do that, and we can have a 3 million ounce company. We would be, again, back to where we belong. It's a very simple strategy in the end. We see.
Thanks, Alberto. The next is Sandile Magagula at Umthombo Wealth. He said, "What is the cost of converting resource to reserve in Australia, and what cost do you take into account to arrive at that price?
Look, I'll ask Terry to help us with that. He's our chief development officer. It's roughly around $40 an ounce to convert from resource to reserve. Maybe you can give some more color, Terry.
Yeah, thanks, Alberto. That $40 an ounce number is for Australia. At a portfolio level it's closer to $60 an ounce. Just to emphasize, we don't drill to convert to reserve, but we drill to upgrade the resource from inferred to indicated or measured, and then we allow mine planning and modifying factors to determine a reserve from that. In terms of what goes into that $ per ounce cost, it's all the exploration costs, the drilling, the assaying, and the labor to come with that figure.
Thank you.
Great. Thanks, Terry. From Catherine Cunningham at J.P. Morgan, she says, "With the reserve price increasing to $1,400 an ounce, to what extent do you expect an increase in total cash costs from lower cut-off grades?
No. No, no. We actually probably expect... Let me backtrack. The reason why we did this is because in discussions with the technical experts, we were now running the risk in our mine plans to sterilize resources. When you have a, what would be from $1,200 and $650 gap, between the spot price and $1,200, the risk that you sterilize resources, let's say at $1,350, that are still very high margins. You sterilize them is, it's. That's really far from optimal. This is a movement more to optimize, but still being very conservative. We are below the average of our competitors. I think this is the. We thought about this long.
There was a lot of sort of, effort and study going into this. I think it's the right, if I say, conservative, but optimal move for mine planning.
Great. Thanks, Alberto. I think with apologies for any outstanding questions, we've run up against time. I'm going to hand over Claudia to you just to, or in fact, back to you, Alberto, just for some closing comments.
Look, I just wanna reflect sometimes we don't know the year that passed. I know that the market looks for the future, and rightfully so. The year that passed, we're quite, and I'm personally quite proud of what the team delivered. We delivered. We would be probably one of the few companies to not change guidance this year. We delivered production on guidance. We delivered cost on guidance. We actually decreased our All-in Sustaining Cost by 10% in real terms, which is not a minor feat. We did this with the most important metric of all, which is safety. Our people were safe. We have the lowest right now in the industry, TRIF, like 1.28. The average in the industry would be 2.7. What else can you ask a team?
I'm really grateful and proud of them. You know, production, volume, cost, all excel. 2023 was always a transition year. I can understand. I've read some of the analysts already and say, "Well, we expected a bit more reduction in cash costs." We are coming from a very high base in 2022. This is a transition year. We are starting to see the benefits of full asset potential. The full benefits you will start to seeing in 2024 and 2025. We just stick to our strategy. It's working. We believe that we create the most value for our shareholders internally. Thank you.
Thanks, Claudia. Thanks, everybody.
Thank you very much. Ladies and gentlemen, that does conclude today's call. Thank you for joining us. You may now disconnect your lines.