Good afternoon. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to the B2Gold Third Quarter 2020 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press the pound key. Thank you. Mr. Clive Johnson, President and CEO, you may begin.
Thanks, operator. Welcome, everyone, to our conference call to discuss the third quarter of 2020 financial results for B2Gold. Obviously, I think most of you have probably seen our news release that came out last night. Another very strong quarter putting us on target to the lower end of our guidance for 2020 for the year. I'm going to pass it on to Mike Cinnamond now. Mike's going to walk you through the highlights of the financial results, and then Bill Lytle, Senior Vice President, Operations, is going to give us an operational update and talk to you a little bit more about growth, and then we'll open up for questions.
We had a very good session with an analyst session 10 days ago. I'm pretty sure they won't have that many questions, but if they do, that's fine. This is an opportunity for our shareholders to ask some questions again. Once again, very happy with the quarter, another strong quarter. With that, I'll pass it over to Mike to give you some of the highlights. Thanks, Mike.
Hey, thanks, Clive. I'm going to start just on the revenue side. We quarterly record revenue of $487 million. We sold 253,000 ounces at an average price of $1,924 an ounce. Included in those gold sales were some sales over $2,000 an ounce. That's pretty fun to do. Obviously, we're all watching closely to see what happens to the gold price now as hopefully we'll see the results of the U.S. election in short order or relatively short order. Should also say that year to date, we have record revenues of $1.3 billion. It's been an excellent year for B2 even in the midst of this COVID pandemic. Turning to the operating side. Production, we had total production of 264,000 ounces. That's made up of 249,000 ounces from our three mines and then 15,000 ounces from our attributable share of Calibre's results.
On our production side, led as always by Fekola, 153,000 ounces or 3,000 ounces above budget. Fekola had excellent quarter again. Process grade and recovery, both higher than budget, more than offset a little bit of downtime on the throughput side as we took the mill down to do the Fekola mill expansion tie-in and also to do a full SAG mill reline. Even with that tie-in in place, we still managed to beat budget by 3,000 ounces at Fekola. Masbate is right on budget, 54,000 ounces. Masbate, the only thing different in the quarter from Masbate was that we had a magnitude 6.6 earthquake in mid-August, and we had to take the mill down for about six days while inspections were carried out by the Philippine Mines and Geosciences Bureau. Those inspections confirmed no damage, and Masbate is running very well.
Otjikoto, 43,000 ounces, 1,000 ounces above budget. Basically, Otjikoto continues to move along nicely. Year to date, our consolidated production is 770,000 ounces, including our share at Calibre. That's about 20,000 ounces ahead of budget overall. We turn to the cost side of that equation. Our total cash costs for the period, including our share of Calibre, is $435 an ounce, which is $6 lower than budget. Looking at our three operations, we're at $411 an ounce against a budget of $428. $17 an ounce less than budget for the three-month period. Fekola was $333, broadly in line with budget. That's really made up of slightly higher gold production, as I just described earlier, with generally in line total mining costs. We did see some costs that were marginally higher than budget due to changes in mining sequences and some COVID related costs.
We've also seen in Mali that fuel costs have been on or slightly above budget, which sort of bucks the trend that we've seen elsewhere in the world. Just a reminder to everyone that in Mali, fuels are set one month in advance by the government and don't always follow with the underlying fuel indices. Masbate was $615 an ounce which is $33 less than budget. They continue a great run. Same story as we've seen in Q1 and Q2. Mining and processing costs were lower than budget, with lower diesel and HFO prices and lower waste stripping and lower haulage distances as we had a bit of a mine sequence change there to deal with COVID during the current year. Otjikoto, $435 an ounce, $66 an ounce less than budget. It's continuing to totally outperform the budget there.
Again, same story as the first two quarters, higher than budgeted gold production, lower fuel costs, and a significantly weaker than budgeted Namibian dollar all added to the positive outcome for Otjikoto. On the all-in sustaining cost side, our total all-in sustaining cost per ounce including Calibre, were $785 an ounce for the quarter. That's $19 less than budget. When you take our three operations, it was $766 an ounce, which is $31 less than budget. Again, not to sound like a broken record, same as really the first two quarters, but we did see some CapEx catch up in Q3. We've seen some CapEx moving around during the year, and I'll comment a little bit more, we think CapEx is going to come out overall for the year.
We did see a little bit of lower CapEx earlier in the year, and some of that caught up in the quarter, and we do expect some of that to catch up in Q4. If you look at all-ins for the year to date on a consolidated basis, we're $740 an ounce, which is $75 less than budget. You can see that we're still expecting to see some of that CapEx catch up in Q4. Okay. Take all those results and where we think we were going to come out guidance wise. Firstly, on the production side, Fekola mine, we guided 590,000 ounces-620,000 ounces. We think we're going to come out somewhere at the upper end or right at the upper end of that guidance range. Masbate was 200,000 -210,000 ounces. We think we'll be in that range easily in the middle.
Otjikoto 165,000-175,000 ounces. Again, it's right in that middle of that range. Overall, including our share at Calibre, our total consolidated guidance for the year was 1 million to 1,055,000 ounces, and we think we'll come in right in the middle of that consolidated range. On the cash costs and all-in sustaining cost side, for Fekola, it was a range of $285-$325. We think we'll be in the range. Masbate, $665-$705, we think we'll be at or below the low end of that range. Otjikoto, $480-$520, we think we'll be at or below the low end of that range. When you take in our consolidated position, including Calibre, it's $415-$455, we think we'll be at or even slightly below the low end of that consolidated range. On the all-in sustaining cost side, Fekola's range was $555-$595.
We think we'll be at the upper end of that range when all is said and done for the year. Masbate, $965-$1,005 per ounce, we think we'll be in the range. Otjikoto, $1,010-$1,050 ounces, we think we'll be at or below the low end of that range. Overall consolidated $780-$820, we think we'll be at the lower end of the range. As I mentioned, we do have some CapEx to catch up in Q4. We think it'll be somewhere in the range of $100 million-$110 million. Overall for the year, if you look at our total CapEx that we budgeted, we'll likely come in somewhere around $10 million less than that total. When you factor that in, you're looking at somewhere around $100 million-$110 million in CapEx in Q4. You will see higher all-in sustaining costs in Q4.
Overall, as I said, we think we're going to come in at the low end of that range, $780-$820 for the year consolidated. A couple other comments maybe on the operations generally. The Fekola mine expansion, the mill expansion is now materially complete. The new mill came online and has been commissioned in September. I should comment, the final construction cost of that plant expansion were a little higher than we budgeted. They were about $13 million higher overall when all was said and done, and the majority of those overruns related to COVID-19 costs and delays and increased labor and camp costs related to dealing with the pandemic and bringing the people in and out to get that expansion finished. Overall, very solid performance and they came in basically ahead of schedule.
On the Fekola solar side, as we announced previously and disclosed, we did have some delays on that earlier in the year as we were trying to manage bringing people in and out of the camp. We restarted the Solar Plant activity mid-September, and we are expecting completion to be by the end of Q1 2021, assuming that we're still able to bring people in uninterrupted to get that done. To remind everyone, too, it doesn't impact 2020 guidance at all with Solar Plant, but we do think we'll bring it online sort of earlier in 2021. Maybe a comment overall on the Mali situation. Mali and Fekola. Fekola's just run very well through the year, considering everything we've had to deal with and the country's had to deal with in terms of the COVID pandemic and the coup, and we're still seeing Fekola operating at record levels.
Just to remind you, too, that in Mali, the state of Mali is a 20% partner in the Fekola mine. They're a direct beneficiary of the results in the mine. We did put in some highlights of the total amounts that have been paid to the government and state since we started operations there. From 2017 to 2019, we paid $140 million plus in wages and benefits. Total payments to the government were around $276 million. It's a big contributor to the economy in Mali there. That $276 includes priority dividends that the government gets for 10% of its share. In addition, a second 10% it owns are also eligible for ordinary dividends. We're just getting to the point where we're going to start paying those dividends.
We've just reached the point where all our initial capital investment and the loans that we put into the country to get Fekola up and running have been repaid. We're now starting to pay ordinary dividends. Again, the state will benefit from that. Also, just a reminder for everyone, Fekola is governed by the 2012 Mining Code, and we have a 2012 mining convention. When the 2019 mining convention came in, it did include specific stabilization terms, just confirming that Fekola and the way Fekola operates is grandfathered under the 2012 code. All right, just going to move on, just talk a little bit about some of the other income statement items and then a couple of comments on the cash flow. On the income statement items, a few items just to raise your attention.
One of the most significant ones below the gross profit line relates to the reversal of impairment of long-lived assets. We have a reversal there of $174 million. Net of deferred income taxes, that reversal has an impact on the bottom line of $122 million, and that relates to Masbate. We had booked an impairment on the Masbate carrying value years ago when gold prices really dipped. This adjustment here represents the final reversals of any final amounts still remaining of that impairment charge that could be reversed. It was driven by a change in our forecast gold price assumption based on analyst consensus and other analysis we did. Long-term gold price, now we're using an assumption of $1,500 an ounce for accounting purposes. That led to that impairment reversal. Share of income and associate Calibre, we've got almost $11 million there.
Calibre's back up and running in Q3, and we picked up a net $11 million share of their results for the period. To highlight the taxes section, the taxes are significant. We're taxable in all jurisdictions. Mali, there were no accelerated deductions there, so we're paying taxes out of the gate. Masbate and Otjikoto, we're also fully taxable there now. Any residual tax loss carryforwards that we had there, or accelerated investment deductions, et cetera, are all gone now. We're paying taxes everywhere, and that's really a function of the mines running well and the higher gold prices. All that translated into net income for the period, $277 million. Of that, $262 attributable to shareholders of the company or $0.25 a share. If you adjust that for significant non-cash items, including that Masbate impairment reversal, you get to adjusted income $161 million or $0.15 a share.
If you look at our results year to date, net income for the nine months, almost half a billion, $498 million. Of that, $460 million attributed to shareholders of the company, $0.44 a share, or adjusted net income, $368 million or $0.35 a share. I'm going to talk about a few items in the cash flow. First of all, operating cash flow. We had a great quarter, just over $300 million operating cash flow, $0.31 a share, or $755 million operating cash flow, $0.73 a share year to date. When you look at that, it looks like we're well positioned to get up to that billion-dollar level cash flow-wise, if you prorate it up. We have been reminding you, we've given you some detail on the MD&A.
Part of our operating cash flow includes significant taxes that aren't yet paid in cash. We've accrued them in the financials, but they're not yet paid. In Q4, in total for the years to date, we paid cash taxes of about $94 million. For the year to date, we're anticipating somewhere around $205 million cash taxes, some pretty hefty cash payments to come in Q4. Just remember that for your models. There will be some true-up of Malian taxes in Q1, Q2 next year, as is laid out under the rules for payment of taxes in Mali.
One of the items that we have highlighted in there, those cash tax numbers I gave you, $205 million for the year, that does include about, we're looking at up to maybe $50 million of tax prepayments for the year that aren't strictly due until Q1 or early Q2 next year. We think that the taxes have already been incurred, and we have the cash on hand, so we may prepay some of those taxes, and a significant chunk of those would relate to Mali. On the financing side, I guess the story you can see there is that we have now repaid the revolver fully. In the quarter, we paid back down $425 million, which was the total outstanding balance on our revolver. We have no amount drawn under the revolver.
We just have a little bit of debt under the finance leases related mainly to Fekola of about $50 million. Other than that, there's no other debt. What we have left on the revolver is $600 million undrawn capacity, plus another $200 million accordion. We really have $800 million of firepower there with the revolver as it stands. We will, in Q4, expect to see about $40 million come in from CAT loans, though, because we've always used CAT to help finance part of our fleets around the world. As part of the Fekola fleet expansion that ties in with Fekola mill expansion, we financed about $40 million of that in cash. You will see that come in in Q4. Dividend-wise, we paid $62 million in the quarter and $73 million year to date.
We're paying dividends right now at the rate of $0.04 per share quarterly. That would be $0.16 annualized U.S., which equates to about $170 million a year. That's a yield right now of about 2.4%, which I think puts us right up near the top of the dividend-paying gold companies. Maybe a comment on that from a capital allocation point of view. We are continuing to generate strong cash flow. You can see in the cash flow here that we ended the quarter with $365 million, and we'll continue to generate that cash over the course of the rest of the year. As we move into next year, we've got a couple of big capital allocation decisions, the most significant one being for Gramalote.
At Gramalote, we're expecting to get the feasibility study complete by the end of the first quarter next year. That'll put us in a position to make a build decision and discuss with our partner, AGA. At that point, we will have a significant capital allocation decision to make. In addition to that, we're also looking at our options at Kiaka in Burkina, how we might want to advance that project. Also just looking at, we've got a big drilling campaign on the exploration side and got good results in Mali and elsewhere around the world.
We'll be looking at the results of that and just deciding what we want to do, allocation of capital versus that. Once we have a look at all of those things and decide what our capital needs are, we can also revisit our dividend allocation and see if we want to do anything about changing the dividend rate. Just final comment, really, on the investing side of CapEx, as I mentioned, overall, we had budgeted about $390 million for the year, total CapEx. We think we'll be about $10 under, so forecast about $380. If you look at the cash spent on CapEx to date, it's about $265 million cash outflow for CapEx. We got somewhere in the region higher than $110 million, $115 million to go. That's what we expect to see, somewhere around that mark in Q4.
Gramalote itself, we haven't talked about that CapEx. We are slightly behind for Q3, but overall for the year, our share at Gramalote's about, I think about $26 million, and we think we're going to be broadly in line, having spent most of that. Exploration. We are a bit behind year to date, but our total exploration budget for the year is $53 million. Again, we're forecasting to have spent most, if not all, of that by the end of the year. That's kind of where we are overall, and that leaves us with cash and cash equivalents at the end of Q3 and very strong cash flow generating position.
Cash and cash equivalent is $365 million at the end of the year, and we look forward to moving forward and continuing to see that cash balance grow as we move forward into the end of the year and into next year. That really sums up the main comments I was going to make on the results.
Okay. Thanks, Mike. I just realized in my intro, I may have left a word I think I said the words lower end of guidance for 2020. I meant the lower end of cost guidance, of course, as Mike thankfully got it right. Obviously, very strong quarter, good financial results, and as we've said, on track for the mid-range of our production guidance of between 1 million and 1.05 million ounces of gold. Our costs, we're expecting to be at or below the low end of our guidance range on operating costs between $415 and $455. All-in sustaining costs, we expect to be at the lower end of our guidance, which is the range of between $780 and $820 per ounce. Just wanted to make sure I clarified that. Okay, I think we'll pass it over to Bill now.
He gives a quick review, and more focused on, I guess, some of the growth opportunities we see going forward. As I mentioned, we had a session with the analysts recently and covered a lot of ground. Bill, maybe you can just give us an update on that.
Yeah, sure.
We'll open to questions.
All right. Thanks, Clive. I don't want to really go rehash what Mike said through the first three quarters of 2020. I'll just reiterate what he said, that we remain on guidance for the year. Obviously, great quarter, given everything that's going on around the world. I would like to just point out real quickly once again, that we did have another amazing health and safety quarter where we had a second quarter in a row with no lost time accidents. Our lost time injury frequency rate is down really amongst the industry leaders for sure, if not at the low end of the industry leaders. Of course, we continue to perform on all of our ESG commitments as best in class as well. Maybe looking forward a little bit. The budgets aren't out for 2020.
We normally put them out right after the first of the year publicly, but I do want to talk a little bit about production, as Clive said, over the next couple of years for sure, the next five years even. We did put out a slide for the analysts, which kind of showed us really production, assuming everything goes according to plan, should basically look like what it did as good as it did this year, kind of in that right around that million ounce range. There's a couple of things coming up. By the end of this year, the exploration group has agreed or has told us that they're going to turn over an updated resource for Anaconda. We'll be using that to look at some long-term potential, which I'll talk about in just a minute. At Fekola.
In Q1 of next year, Mike's already talked about the Gramalote feasibility. We feel pretty good about that so far, I'm going to talk a little about how that fits in our profile potentially. At the end of Q1 also, the exploration group is going to put out a resource on Cardinal and FMZ. That really has the potential, if you look at what we're doing right now, that really has the potential to have almost immediate impact, because when we did the expansion for the mill, we talked about that we're going to from 6 million to 7.5 million tons per annum. We've always been a bit cagey about that. We've always said it's really whatever we think the maximum production is plus 1.5 million tons per annum.
Now that we've got the expansion done, we just finished up a two-week test on where we think that mill can run, at least for 2021. We put some ore through that was representative of next year's mill feed. There's the potential, certainly, that we can have additional capacity above that 7.5 million tons per annum. Of course, we could feed that with low grade, and that would have kind of a marginal impact on our ounce profile. We could actually, if there is something in that Cardinal FMZ area, we could fast-track that into a production. We could see even potentially late 2021 and 2022 seeing some production from Cardinal FMZ, if that pans out at the end of Q1.
We're kind of tentatively scheduling some material that's come through next year for that, and that would help us with our ounce profile in 2021 and 2022. Additionally, one of the things that we want to do is we want to take a big bulk sample from the saprolite at Anaconda, and we're talking 200,000 tons or something like that, and run that through the mill. We've always been very open, saying that if we can get saprolite, there is a percentage, 10%-15%, above our maximum operating rate that we could feed the saprolite through. There's the potential, once again, to get ounces from there. Of course, even the existing resource shows a lot of potential for some high-grade pockets that we could truck down to Fekola while we're waiting to figure out what we're going to do long term with Anaconda.
We could see that fitting into our production profile, kind of into that 2023 and 2024 range. Once we get that all sorted out with a bulk sample. Looking at 2021, our production will come from Fekola main, potentially Cardinal FMZ, and then of course, the regular sources in Masbate and Otjikoto. If you go on to 2022, again, you'd have the same thing at Fekola, Cardinal FMZ. You'd have the same thing at Masbate. You'd have Otjikoto from the open pit, but you'd also start to see the ounces flowing from the underground. Those underground ounces could see us up around 200,000 ounces at Otjikoto in 2022. On to 2023, you'd start to see the Cardinal come in. You'd see, obviously, the same thing from Fekola.
You'd have Masbate, you'd have Otjikoto, you'd have Otjikoto underground. Then all the way out in 2024, what you'd see, Fekola, you'd see Cardinal, Masbate, Otjikoto underground. By this time, it's our intention that we'd have Gramalote up and running. That would hit us in 2024. Once again, you'd see a very nice profile of just about a million ounces for all five of those years. Obviously, with the potential for anything which might be developed through Kiaka or other sources coming in on top of that. Clive, is there anything else you want me to talk about?
No, Bill, I think that's a good summary. I think with that, we'll open up the questions. We've got the team on the phone. As I said, we had a pretty extensive, good session with the analysts recently. Tom's on the phone to answer those questions on exploration. We're open to questions, thanks.
At this time, I'd like to remind everyone, in order to ask a question, please press star, followed by the number one on your telephone keypad. We'll pause for a moment while we compile the Q&A roster. Our first question comes from the line of Ovais Habib from Scotiabank. Go ahead, please. Your line is open.
Thanks, operator. Hi, Clive and B2 team. Congrats on a good quarter, and thanks for taking my questions. My first question was going to be on capital allocation, but Mike covered that well. My next question then is for Bill. In regards to Wolfshag, B2 has guided towards production about 500 tons per day, which equates to about 182,000 tons per year. You currently have about 1.6 million tons of recoverable tons. In the Analyst Day, you have guided towards the underground ending in mid 2025 and starting in 2022. Are you just being conservative on the underground mine life, or am I missing something here?
Hello, Bill?
Oh, sorry. I've been talking for two minutes on mute. Apologies. The answer is yes, it is a bit conservative, Ovais. There absolutely is production rate upside. The reality is, if you remember, we've always talked about this potential down plunge extension, which can take us even further. At this time, we're talking primarily about reserves that are in the existing mine life with the potential upside for down plunge expansion.
Okay, that's just a more functional drilling then, and just better understanding?
That's correct.
Okay, got it. Just moving on to Cardinal. On Cardinal FMZ, what are you looking to see at Cardinal, basically, in the resource update to get the deposit across the line into production? Is there anything, any metallurgy or anything else that you need to see before it comes into production?
Yeah. Certainly, I can't talk about it from an exploration standpoint. What I can tell you is that they're going to put a resource on it. What we've done is we've looked at what they have, which is at an inferred level, and we put a mine plan on it and really saw how it really fit in as far as our waste dumps and everything else. What we're just looking for is additional confidence in what their inferred resource is. I think the reality is, this thing, even without a lot more drilling, we could put into our mine plan. We do have metallurgical testing already done on it at a high level, and we don't see any issues from a milling standpoint.
Okay. That's great, Bill. That's it from me, guys. Thanks so much.
Thanks, Ovais.
Our next question comes from the line of Geordie Mark with Haywood Securities. Go ahead, please. Your line is open.
Yeah. Good morning, all, and thanks for the call today. Maybe we can run over the Masbate reversal and perhaps the implications or potential implications for updating future resource reserve estimates, whether that's an easy migration given the changing commodity price assumption. Are you looking at additional drilling there to flesh out the geological confidence of resources, and what sort of life of mine expansion that we could expect to come into that financial assumption out to 2036 as shown in the MD&A ?
Sorry, Geordie, could you maybe just clarify your question just a little bit? It sounds like there's two parts. Do you just want to clarify again?
Sure. I guess the first part would be any near-term changes in the reserve resource estimates to arise from a higher gold price assumption. The other component there is what would be required on a drilling basis to fulfill that, if any.
I can take that.
Who wants to take that?
Yeah. Geordie, to answer your question, we took the existing resource that we had, and we projected it to depth and looked at it with increasing gold prices. What came out of that was, yes, the pits can get bigger with the higher gold price or current gold prices. The drill program we're doing right now, and that we've been doing this year, was to take that material and get as much of that into indicated as possible. It's not going to be complete. We're going to have to continue that program next year. With the results from this year, we'll be able to update some of the resources in the areas we drilled to, and hopefully, some of that will get into the AISC. Does that answer your question?
Yeah. That's pretty good. Thanks. Maybe one last question, because we had a good hour stay there a little while back. Just on Cardinal, following from our base there, and maybe some of Bill's commentary. You're currently continuing to drill at Cardinal with two rigs, and still looking at pushing out the known boundaries on the downtime basis?
Right now at Cardinal, we're down to just one drill, drilling deeper in Cardinal. We're only capable right this year with our camp set up and isolation for COVID to really manage four drills. The other three drills now we've pushed up into Mamba, as we see that area as being a significant upside for us. We're still continuing with the one drill going down plunge in the deeper part of Cardinal.
Excellent. Thank you. Appreciate the time today.
Thanks, Geordie.
Our next question comes from the line of Carey MacRury from Canaccord Genuity. Go ahead, please. Your line is open.
Hi, good morning, guys. Maybe just another question on Cardinal. How does it compare versus Fekola proper in terms of things like width and strip ratio, in terms of getting in there and mining it, and maybe grade?
In terms of width, it's quite a bit narrower than Fekola. You got to remember, Fekola in places is close to 200 meters wide. We don't see anything like that at Cardinal. I think the maximum widths we've seen at Cardinal are upwards or close to 30 meters. Generally, Cardinal is less than 10 meters. Strip ratio, don't have those yet because we haven't completed the resource. Without a resource, we can't really put a decent mine plan on. When we complete our resource in the first quarter, it'll be an updated inferred. A portion of it will be indicated. The engineering guys will put a mine plan on it. At that point, we'll have a better idea of what the strip ratio is going to be. [crosstalk]
Sure. Yeah.
Well, and maybe-
Sorry. Maybe just switching to Kiaka. You mentioned the technical study coming there. Can you give us a bit of a sense of what you're looking to do there in terms of plant size? Is this like a smaller, higher grade project than what the previous owner considered, or just some context around what you're thinking there?
You want me to answer that, Clive, or you want to pass it on to Dennis?
Sorry, I missed the question.
Yeah. In general, what we're looking to do is we're looking to update the existing feasibility study. The plant size isn't through, but I think we're talking around 12 million tons per annum is what we're really looking at. That's primarily because all those studies have already been done. The key difference is we're looking at things like, obviously, the fuel cost. Natural gas is in play now. We're talking about running a dual fuel truck system there. Really, we're looking at the cost side and about 12 million tons per annum to make that project economic.
Got it. Thank you.
Again, as a reminder, if you'd like to ask a question, please press star followed by the number one on your telephone keypad. Our next question is from the line of Lawson Winder with Bank of America Securities. Go ahead, please. Your line is open.
Hello, gentlemen. Thank you for taking the question. Great quarter. Just on Fekola, I might ask, with the increased mining equipment you now have and the increased mining you're doing. Should we be expecting the grades to be materially higher in 2022 than what we saw in the last technical study?
I'll answer it and then Randy can correct me. I think Randy's on the call. He'll correct me if I'm wrong. If you remember, when we did the study, we optimized it for that mining equipment. Right? What we did is we employed an optimized stockpiling strategy from day one. I don't think you're going to see anything different than what you're seeing in a PEA coming up in 2022 for sure. I think what we had in the PEA is what you're going to get. Am I correct, Randy?
Yeah. That's correct, Bill.
Good.
Okay. That's very helpful. Then I just wanted to ask again on Kiaka. I think it's intriguing you're looking at it. As we know it now, it seems to me like it's an asset that probably dilutes the portfolio to some extent, just given the very high quality of the existing assets you guys have. I'm wondering if a potential sale is still something you guys are considering, or are you leaning towards building it yourselves at this point?
Yeah, good question. I think it's pretty early days in that regard. Just to remind everybody, we have been doing some internal valuations, and we mentioned it, I think, in the news release, that we've been looking at natural gas as an option, fuel, and some other things, solar, et cetera, that actually can have a pretty significant impact, potentially, on the economics of Kiaka. We have some internal ones that show some pretty compelling economics, and if we can prove that up with the new resource and the updated feasibility study by the middle of next year, then we'll have a clearer picture. I think it's become, not just because of gold price, it's become a more interesting asset to us for some of the reasons I explained. It's a good ore body. It's 4 million ounces. I think it has some unrealized value for our shareholders.
Our job is to get value for our shareholders. As we go through the next months understanding it better, I think we'll start looking at timing. We're not going to change our strategy and start building two gold mines, big gold mines at the same time. We've always said that's something we would not do. You start looking at scheduling between Gramalote and Kiaka, and we'll look at that and say, is there a potential opportunity to unlock the value of both of them over a period of time without detracting from what we're doing at once? We're going to stay disciplined on our approach to one mine at a time construction. The other alternatives would be to bring a partner in to build the mine. There's other active players and key players in Burkina Faso. As I mentioned, it's a good deposit.
We think others will find it attractive as well. Ultimately, the potential, of course, is always to consider selling the asset. We'll look at those alternatives over the next few months. The government of Burkina Faso, understandably, expect this project to move forward if it's economic. We think that if the current internal view, which is early, but if the current internal technical view could lower fuel costs, obviously a better gold price environment. If those become reality, we think we've got a very significant asset that has the potential to produce for a long period of time, or somewhere around 300,000 or 350,000 ounces of gold a year in a country where many others have succeeded. That's our current take on Kiaka. I think it's becoming potentially a significant asset for our shareholders.
Okay. Yeah, no, that's great. That's tremendously helpful color. Just remind us, the intention still is mid-2021 to have an updated study out. Now, I can't recall. Is that going to be a pre-feas or feasibility level study?
Well, we've got a full feasibility study that we had done before. Now we're doing updating the resource. It'll be a full feasibility study. We'll have a better view in the first quarter internally, I think, but it'll be full feasibility, Bill, I think by the middle of the year. Sorry, Dennis?
Yeah. Our goal is to get to a completed We're going to redesign the thing at 12 million. We're going to do all of the work, first principle study, and really get the economics to where we have really good, solid economics to base certain decisions on. We hope to have that by the end of the first quarter. We'll take that information and put it into a full feasibility study by around the middle of the year.
Okay. That's very helpful. Thank you. Then just one final question on the gold price assumption. During the Analyst Day, you guys had mentioned that for reserves, you intend to use $1,500. I just wanted to follow up and ask what your thinking was around that particular level, partly in light of how some of your peers are choosing to be a little bit more conservative and not change prices versus the year-end 2019, whereas others are planning to go still higher. Thanks.
Mike, you want to talk to that?
Well, I think, if you look at the reserve price, the $1,500, we based that on long-term consensus. We think that's as reasonable a basis as anything to look at. If you look back, I think the trailing three-year average is not a whole lot different anyway. That's where we got to in the reserves. Then on the resources side, which is higher, $1,800, it's still obviously a fair bit less than current pricing, and resources, by definition, need to be priced higher than the reserve level. This is where we are. We think that $1,800, again, if you look at the consensus range from somebody like that. It's in the ballpark, for sure. It's in the range. That's how we arrived at it.
It's a combo of looking at what has happened and where the analysts see things going forward in order to come up with what we think is a reasonable price to at least know what we have in each location, especially, you heard Tom comment on Masbate there. It's significant for Masbate, a change in price there in terms of reserves and resources.
Maybe just from a corporate point of view, we don't use $1,500 gold to try and bring in reserves resources per se. At the end of the day, we're a low-cost producer. We're talking about, based on what we know today, the next five years being around 1 million ounces a year on average. We've pressed up around about sustainable sustaining costs. We're one of the lowest cost, if not the lowest cost producer. We could've used $1,200 or $1,100, I guess. I don't know. Many people think we're conservative. We're really conservative, and we're very good at being a low-cost producer. The gold price we choose to use is not a reflection, like many other companies desperately using a higher gold price to try and make a bit of money or to bring in resources. We don't play that game.
I would focus on our costs. $1,500 gold, using it for reserves does not mean we expect our costs to go dramatically higher and need $1,500 gold to make money. We were making a lot of money at $1,300 gold. I just want to give you a little bit of insight. We can play the ultra-conservative game, I guess, but we don't need to. We don't need to do that. I think the evidence of what we've accomplished in the last 13 years or so should speak to that, I think.
Yeah, and maybe just to add to that, Clive, one of the things that we really struggle with from an operational standpoint when you have numbers which are much lower than what they actually are, is how do you plan for things? How do you design for your waste dumps and where you're going to put low-grade stockpiles? What is going to be your cut-off grade? All this stuff, which is not really based on what we're seeing in reality, it makes it a lot harder. You end up running two books. For us, $1,500 is operationally what we think is right.
Okay. That's very helpful. Thanks for illuminating that, guys. Again, great quarter. Thanks.
Thanks. Bill, I'm just thinking we might need to raise more questions on Cardinal. We like it, even though it's narrower than Fekola, we're fast-tracking it for a reason, right? Maybe Bill, you can respond to that from an engineering point of view. Yes, we don't have a full resource on it yet, why have we moved all those drill rigs onto it? Despite the fact that it's narrower than Fekola, my understanding is we think it has some good open-pit potential.
Yeah.
In the near term.
Yeah, actually, when Tom was answering, I thought maybe I'd throw that in there, but we moved past it too quick. I guess it requires some historical context. Originally, that's where we wanted to put our next waste dumps. We were thinking about moving right there. Before they could do it, they obviously had to condemn it. They started at surface identifying this as an area which has great potential at surface, for some sort of small pit. We didn't want to bury that with a waste dump. We said, "Okay." We put on a mine plan on a very rough inferred resource, and said, "Jeez, there's the potential to pull those ounces." Those ounces actually that I was talking about in that 2021 and 2022, those are from that study that we did.
We know that there's an open pit potential there regardless of what they come up with. What actually happened is then once we started doing that, the exploration group came and said, "Oh, well, just stop on this short pit, this little pit. We think there's a much bigger project there." That's what they're drilling right now. We're very confident, at the very least, at this small open pit, with the potential for it to get much, much larger.
Ultimately underground, potentially.
Ultimately underground, potentially.
Thanks, Bill.
As a reminder, if you'd like to ask a question, to enter the question queue, please press star followed by the number one on your telephone keypad. Our next question comes from the line of Don DeMarco with National Bank Financial. Go ahead, please. Your line is open.
Oh, hi. Thank you, operator. It's a question for Mike. Mike, given that some of the tax prepayments from 2020 that are not due till 2021, should we model an offset in 2021 with maybe lower tax payments?
Yeah. The way Mali works is, mainly Mali, the other jurisdictions basically you settle it up in the year in question. Mali, you pay based on the prior year taxes you pay. It's like you do in Canada. You pay installments based on the prior year, you true it up in the following year. It's April, actually, that you do it. Yes. Whatever you've modeled as actual taxes payable this year, whatever we prepay in December, you would reduce from the true-up in April next year. That's right.
Okay. Just remind me then, what did you do in 2019? Did you prepay in 2019 as well, for 2020?
In 2019, we had a small prepayment. I think we paid, from memory, it was either $12 million or $15 million in December.
Okay. It's just your practice.
Not a big number.
Okay. My next question is, in the past you've only built one mine at a time. Would you guys ever consider overlapping construction of two mines like Gramalote and Kiaka, or maybe Gramalote and then Anaconda standalone?
I'll get Bill to add onto that. I think the principle is we've been very successful by focusing and building one mine at a time. My initial reaction when Kiaka started to look more interesting was to say, "Well, okay, great, we're not going to build two mines at the same time. If it's in the same timeframe as Gramalote, then we need to bring a partner in or sell." Was my first response. Bill, then the guys started playing around and saying, "Well, actually, maybe from a scheduling point of view, we might be able to consider an alternative." Very early, we might consider an alternative to be able to progress both without by overlapping, as you said. I'll pass it on to Bill for his thoughts. It's very early, that's where we were.
I was assuming we're going to need to find a partner or sell it to stay within our conservative strategy of building one mine at a time. I know it's the early days, but we can throw it around and maybe you can share some of that with these guys.
Yeah, sure. As you said, Clive, at this point, everything we're talking about is purely conceptual. The question came up, if we had the money and the ability, would the construction team be able to do it? Of course, then you start looking at it, can you slot in your earthworks team to come in first and then rotate off the site while they're waiting for the next big earthworks job to come back to? Basically, you'd have people rotating into various facets of the project. We think there is a path to do that. We've never done it, with the exception of maybe some smaller projects. It would definitely be new for us, but we certainly have the team, we have the capability.
If you look at our senior, the top guys, they almost always have at least one cross shift and maybe another person waiting in the wings. There probably is the potential to do it. It is something that would take a lot of scheduling.
Okay.
Yeah.
And then-
Go ahead.
Oh, I was just going to move on to the next question, but so go ahead. Sorry.
No, I was just going to say, as Bill said, obviously, we proceed with precaution. We just look at it now as an asset, as I said.
Yeah.
Lock the value. We still believe that there are some investors in the industry that want growth. I think a lot of the gold funds are still scared from the mistakes of the past of management and some of their investments. They're still really freaked out about, some about growth. We're looking at generalists funds who want a well-run company that pays a dividend and is good at what they do and can grow the business. We think we've shown that over 13 years. We have an unprecedented ability to grow responsibly. That'll be the driving. We've got lots of assets in the pipeline. We'll review them and we'll take our approach to it as we go.
Okay. Maybe just a final question then. Previously, you've mentioned how you've combed over potential greenfield opportunities, and you made remarks that there's just not a lot out there. Where do you stand right now with respect to greenfield M&A? Is it still something you're pretty actively looking at and maybe adding something small stage to your pipeline still?
Yeah, I think I said or meant to say that when we look at development that's out there today, we don't see a lot that we're in love with, and those that are there are scarce and therefore perhaps highly valued. We have always believed, and have always had a very strong budget through the Bema years and the B2 years, industry-leading budget and exploration with the obvious success that's come from that. We are always looking for greenfield exploration opportunities, whether they be joint ventures, whether they be opportunities that we generate ourselves, such as Uzbekistan, a joint venture with the government of Uzbekistan. Finland, we're drilling an interesting target there, and others. That will continue. I think we've always felt there was exploration potential in the world, and we'll continue to be driven by geology, not geography.
Very unlikely for us to do any major M&A here. You know the growth profile, the assets we have. Let's find out what Gramalote, let's get that going if it's going to be a mine, realize value. Let's find out more about Cardinal and Anaconda, and ultimately what's beneath the saprolite and Anaconda, and now, of course, Kiaka as well. We see a pipeline of potential, of good assets, somewhat unrealized in the market understandably at these stages. We're going to continue to probably budget somewhere, this year was $54 million, I think, in exploration. Next year's probably, haven't taken to the board yet, probably going to be $60. A lot of that will be brownfield, but we're definitely going to be looking for significant exploration opportunities worldwide.
There's a bunch in the pipeline that we can't talk about yet with other, some of them advanced exploration opportunities. That's the way we see our growth and looking forward, definitely with a great team we have in exploration. Of course, we want to continue, as we always have, to utilize them [audio distortion] gold will always be the ones you find.
Okay. Thank you very much for that, and thank you for answering my questions. That's all for me.
There are no further questions in queue at this time. I'd like to turn the call back over to Clive Johnson.
Okay. Well, thank you all for your time, and if other questions occur to any of you, including shareholders, feel free to reach out to Ian MacLean, and he'll put you in touch with the appropriate party to answer your questions. Thank you for your time.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.