Good morning, afternoon, ladies and gentlemen. Welcome to B2Gold's fourth quarter and year-end 2019 financial results conference call. I would now like to turn the call over to Mr. Clive Johnson, President and CEO. You may proceed, Mr. Johnson.
Thank you, operator. Welcome, everyone. We're here to talk about the, as the operator said, the results for the fourth quarter last year and the full year. Obviously, just a great year for B2Gold. Mike's going to get on shortly here and talk about the financial results for both the fourth quarter and year-end, but a solid fourth quarter ending a tremendous year, as indicated in our news release and financial results, et cetera. I guess I'll just talk, maybe give a little overview of where we see ourselves going here in 2020. We gave you quite a lot of detail in the news release and even more in the MD&A, talking about where we are and where we see ourselves going.
The strategy going forward for this year, obviously, is to focus on some of the major things we're doing, such as the Fekola expansion, which is going very well. I'll ask Bill to say a few words on that. That's on budget, on schedule, and of course, that's a pretty dramatic expansion as it increases production from last year's 460,000 ounces to we're estimating somewhere around 600,000 ounces from Fekola for this year, bringing us in at about 1 million ounces to the company, including our 34% ownership of Calibre, reflecting the portion of their production. Mike will take us through some of the details of what we're projecting in terms of cost, et cetera. We're looking at a low-cost year for operating costs. All-in sustaining costs look pretty good as well, and we're also generating an awful lot of cash.
We are projecting that $1,500 gold based on our current assumptions that we could see $700 million from cash flow operations. For every $100 gold is higher than that, so from that $1,500, it adds about $90 million per year in our cash from operations. Significant year this year for cash flow. Free cash flow will continue to increase into next year as we see the expenditures on things like one-off expenditures, like the Fekola expansion will be behind us into next year. I'm very positive looking forward in that regard. In terms of growth, we're going to focus on the pipeline. As we've said for many years now, we still have an excellent pipeline of projects. The two of the key ones, although there's lots going on, two of the key ones would be Gramalote.
We gave you some detail in the MD&A and also the news release. We'll be talking about Gramalote quite a bit more as we go through the year. A major drill program underway with 11 rigs turning to turn the inferred resources of Gramalote into indicated. We put out what we felt was pretty positive numbers on the preliminary economic assessment, which is a dramatic change from the previous economic analysis, which was based on a model that needed some improving and some drilling help. Also reinterpretation of the drill to rock code. We're keen to see if Gramalote has potential to be our next mine. We're the operator now of the joint venture and have an excellent relationship with Agnico Eagle and Ashanti.
We're looking at a full feasibility study by the end of the year to have potential decision whether to go or no-go early next year. We have a permanent hab. There's lots of positives that we outlined in the news release about where we are in Colombia and why we're so positive about Ethiopia as a place to build our first significant open pit gold mine in Colombia. Lots of government supports at all levels. Another key factor is a key focus for this year will be further exploration. We've got a budget of over $50 million worldwide. A lot of that is brownfields, looking around immediately around Fekola and the other mines where we've had very good success, of course. We also have a major program with five rigs turning up in the Anaconda or the Snakes area, as we call it, 20 kilometers north of Fekola.
We've had some very good results there. We have a fairly large weathered zone of saprolite down to 50 meters. That continues to extend to the north, perhaps of greater excitement is the potential for what's beneath the saprolite. We've had some very good drill intercepts that we released a while ago from Mamba underneath the saprolite into the sulfide of the bedrock. It's early days, there's some of the type structures Tom tells me from what we see at Fekola and some of we've seen some good grades and good widths. We're kind of excited about the potential of that vast area up in the north. There'll be lots of other exploration news coming out.
We're definitely looking at still continuing to grow through the drill bit especially in this climate where I think acquisitions are going to get even more expensive. We're pursuing a number of grassroots exploration programs worldwide, which we'll be talking about as they come in, and then also looking for joint ventures with junior exploration companies. Obviously, a bit of a strange day to come up with results in the sense of the overall market and the gold price and all of that. We're in a wonderful position. We couldn't be happier where we are. We're looking at being based on $1,500 gold, the assumptions we could be debt-free in the third quarter of this year, which puts us in a great position going forward.
That's a bit of a summary from me on the strategy, and I'll pass it over to Mike now to give you the detailed financial results of the year 2019 on the fourth quarter.
Thanks, Clive. Just for a start, just to remind everyone, we restructured our interest in the Nicaraguan operations in October, in Q4. For financial statement reporting purposes, results from Nicaragua up to that date are reported as a one-liner in the financials as discontinued operations. Thereafter, we pick up our 34% attributable interest and equity account for Nicaragua from October 15th to December 31st. When I run through the results, I'm going to talk about results from continuing, and then I'm going to talk about what they also were when you take into account Nicaragua. Revenues for the quarter from continuing operations $314 million, a significant increase over the prior year, mainly driven by the increase in gold price and more ounces sold. If you take in adjusted revenues, including $10 million revenues from discontinued operations, it was $324 million for the Q.
It's quite a significant increase over the prior year quarter. Production, very solid in the Q. Total from continuing operations was 228,000 ounces, driven mainly outperformance by Fekola and Otjikoto. Fekola was 11,000 ounces ahead of its original plan, and that's driven by the same stories we had through the year. There's more throughput going through the mill, and because of that, we were able to process more tonnage than we thought, some of which is lower grade stockpile tonnage. Now, it did lower the grade a bit, but the throughput beat the impact of the reduction in grade, so overall, we outperformed, and Fekola had 119,000 ounces in the Q. Otjikoto had 58,000 ounces, again, ahead of budget by about 4,000 ounces, and that continues to be driven by just more ore and better grade coming out of Wolfshag than was originally planned. Slightly offsetting that was Masbate.
Masbate is 51,000 ounces, just 3,000 ounces below plan. That was as expected, and as discussed in Q3. We did plan to have production from Montana in Q4 of 2019, but that, as we indicated previously, that was pushed out into the first quarter of 2020. In fact, work at Montana commenced mid-February of this year. The impact of that was that we had ore with slightly lower recoveries in Q4 than we'd anticipated, and therefore, we were about 3,000 ounces under budget. Overall, production from continuing operations was 12,000 ounces ahead of where we had planned. When you take our share of Nicaragua discontinued operations and our attributable share from October 15 onwards, total production was 245,000 ounces. Just to comment a little bit on the cost for the Q.
Cash costs, and this is on an ounce produced basis, from continuing operations, $442, and from all operations, $467 per ounce for the quarter. We beat plan overall, that's, again, a function of the strong performance at both Fekola and Otjikoto, with the higher production coming from those operations. Masbate was a little higher than originally planned. Masbate was $694 cash cost per ounce. Again, it's a direct impact of that not having that ore come from Monjas West in Q4. Overall, we beat budget by close to $30 an ounce on a cash cost side. On the all-in cost side, from continuing operations, all-in cost per ounce, sustaining cost per ounce were $869 an ounce, the total from all operations, including Nicaragua, was $882 an ounce. What we saw in the Q was mainly catch-up of CapEx.
Although we had a beat overall on the cash cost per ounce, we were ahead of plan, we did have CapEx that had been postponed from the first three quarters of the year and was incurred in the fourth quarter. We had some higher cap at Fekola and Otjikoto as we had CapEx caught up in that period. Also impacting all-in sustaining costs is that we need to remember that we actually budgeted on the basis of $1,200 per ounce last year, and the royalties were based on that price. In fact, through the year, we realized gold price for the whole year of close to $1,400 an ounce. There's a bump in the total royalties that were included in the all-in sustaining costs. Total on a consolidated basis from all operations, again, was $882 per ounce.
Just to comment on some of the results now for the year. Our revenues from all operations, including our share of discontinued operations, was a record $1.3 billion and reflects the fact that all the mines have run very well through the period. On a production basis, from continuing operations, we had 851,000 ounces, well ahead of budget of 800. Including our share of Nicaragua, overall, we had 980,000 ounces, which beat the upper end of our guidance range of 975,000 ounces. Pretty much we'd already pre-released those numbers. If you break it down and look at each op, Fekola had 456,000 ounces, 33 ahead of budget. It's for the same reasons as discussed on the cash cost side, just more throughput, slightly lower grade, more throughput through the mill overall gave us more ounces than we planned.
The 456,000 ounces beat the upper end of its already increased guidance range of between 445 and 455 ounces. Masbate had 217,000 ounces, 9,000 ounces ahead of where we overall budgeted. It's an annual record for Masbate, and it beat the upper end of its guidance range of 200 ounces-210 ounces. Otjikoto, 178,000 ounces, and that again beat the upper end of its range of 165 ounces-175 ounces. The production stories at each of those sites is basically the same as I just described for the quarter, just outperformance at all sites. Just also to comment that our 2020 guidance, so on a fully kind of basis, including Nicaragua, 980,000 ounces for the year. Next year, with the impact of the Fekola expansion coming online throughout the year, I guess, partly from the expanded fleet, and then when the full mill expansion comes online in Q3.
We're guiding 1 million to 1,055,000 ounces, including our 34% attributable share of Nicaragua. On the other end, I maybe just comment at this stage as well, is Fekola. During Q4 2019, Fekola produced its millionth ounce since it started production, which is quite an achievement when you consider it's only been going just over two years. Just to comment on the overall costs and all-in sustaining costs for the full year. On the cash cost side, per ounce produced from continuing operations, $449 an ounce, and including our share of Nicaragua, $512 an ounce. Overall, that consolidated number of $512 per ounce produced, that beat the low end of our guidance range of $520-$560.
Next year, as we go through the year with, A, the impacted gain of Fekola expansion coming online through the year, and a smaller percentage share of the higher cost Nicaraguan operations, we're guiding cash costs of between $415 and $445 per ounce. On the all-in sustaining cost side, consolidated, including all operations in Nicaragua, $862 an ounce, and from continuing operations, $794 an ounce. That's right in the range that we gave. We originally gave a guidance range of $835 to $875, $862 an ounce came just past the midpoint of that range. As I said, it was partly impacted by higher royalties in the period, and also the fact that for the year, we produced 980,000 ounces and we sold 944,000.
The sales were slightly lower and therefore increased the cost per ounce slightly because all-in sustaining costs are presented on an ounce sold basis. Next year for 2020, sort of mirroring the lower cost you see on the cash cost per ounce side, we're guiding between $780 and $820 overall. I'm just going to comment on the income statement for first the quarter and then the year. A couple of items to highlight, I think, in the three-month period to December, sort of as unusual items. Impacting earnings, firstly, were a couple of, one significant non-cash item, which was a reversal of an impairment for $100 million. A few years ago, we booked an impairment of our interest, the carrying value of the Masbate mine.
We originally had purchased that mine when gold was $1,500-plus, higher than 15, and impairment tests as gold therefore subsequently run at $1,250 and we booked an impairment. With the increase in the gold price that we've seen, today's plummet excluded of course, we changed our long-term gold price assumptions of $1,350 and with that, we realized a reversal of $100 million on that impairment that we previously recorded at Masbate. Also impacting the income statement for the period was a gain on sale of the Nicaragua assets of $40 million. As you may recall from our disclosure previously, that restructuring of our interest in Nicaragua was for proceeds of $100 million plus working capital adjustments. Included in that resulted because we had that and that was finalized in October, we booked that gain of $40 million in Q4.
Should also comment that as part of the consideration made up in that $100 million, we took $40 million U.S. worth of equity in Calibre. There was also a $10 million convertible debenture that with the subsequent increase in Calibre share price was converted and today we hold an effective interest in Calibre of 34%. Bottom line, net income for the quarter, $182 million. As noted, that includes the impact of those two items I just discussed, and that's EPS of $0.17 per share. On an adjusted net income basis, adjusted net income as reconciled in our MD&A is $69 million or adjusted EPS of $0.07 per share. Comment now on the 12-month financial results. As mentioned before, $1.3 billion in revenues if you include Nicaragua, $1.2 billion rounded if discontinued operations are included. We had operating income for the 12 months of over $500,000,000 .
A couple of other items I'd mentioned in the P&L, interest in financing expense is $26 million or $26.5 million for the year versus closer to $31 last year. That's due to the lower debt levels that we've had through the period. In 2019, we repaid approximately $220 million of our debt, including $200 million on the revolver. As we currently look forward, we're expecting that by the end of Q3 of 2020, we will have repaid the remaining $200 million on the outstanding revolver balance. Leaving us with $600 million undrawn and available. You should also expect to see a significant decrease in interest expense through next year as we pay that debt down.
Another item to highlight, current income tax expense for the year was $114 million, we'll see higher tax expense as we go forward compared to some prior years for B2 as Fekola is very profitable and there's no accelerated deductions in Mali, so you pay your share of income taxes straight out of the gate, and you get your deductions, your original investment over time. Any previously unutilized losses, loss carryforwards at both Masbate and Otjikoto have been utilized by the time we got to 2019. We're starting to see a higher income tax expense there. On a cash basis, total cash income taxes paid during the year were $119 million, and just a reminder that that also includes payment of the Fekola priority dividend.
On a comparable basis for 2020, I think you can expect we're currently estimating total income taxes, cash income tax payments, including Fekola's dividend, of approximately $115 million. Bottom line earnings for the year, attributable to shareholders, $316 million. Attributable to shareholders $293 million, and that added up to $0.29 per share EPS. If you adjust out the non-cash items for the period, adjusted earnings were $237 million or $0.23 a share. Just going to comment on a couple of line items in the cash flow, firstly, for the quarter. Cash provided by operating activity is $145 million, approximately $0.14 per share. Just to highlight, in Q4, we did make a voluntary $12.5 million installment, cash tax installment payment for Fekola.
We pay installments through the year, but the final balance was due to be settled up in full in Q2 2020, but we actually prepaid $12.5 million in Q4. Also in Q4, we repaid, as we indicated at the end of Q2, we repaid another $100 million in the revolver, leaving us with $200 million at the period end. Q4, we declared and paid our first dividend for B2Gold, so $0.01 per share U.S., expense of $10 million overall for the Q. Looking forward, we've also highlighted in our news release that we declared our dividend for Q1 in the same amount, $0.01 per share U.S. In the quarter, cash from investing activities was net was $58 million, but that was inclusive or net of $51 million proceeds of cash from the Calibre transaction. Gross, it was $108 million.
Like I mentioned, as I talked about the all-in cost per share, that included approximately $11 million catch up for some deferred stripping costs at both Fekola and Otjikoto. It also included in the Q $54 million for the Fekola expansion. Overall, in 2019, we incurred $76 million costs related to Fekola expansion. Remember, that includes both the fleet expenses, mine expansion costs, and work that we've done on the solar plant. $76 million overall in 2019, and we budgeted the remaining $97 million for 2020. Also, just a reminder that we do expect that for the fleet cost, which total approximately $85 million overall, we expect to finance up approximately $40 million of that with Caterpillar loans in the latter part of next year, in 2020, sorry. Finally, just to comment on the cash flow for the full year.
Cash from operating activities overall was $492 million or $0.49 per share. Like I said, we did pay off in Q4 $12.5 million prepayment on our final Fekola tax expenses. Also, right at the end of 2019, we did have about 25,000 ounces that because of late shipments and delays in shipments from the sites, we had sitting at refineries, but it wasn't available for sale until just into the start of 2020. We sold those 25,000 ounces for proceeds of approximately $39 million at a significantly higher gold price, actually, than we would have realized had we sold them in December. Overall, for the year, on the financing side, we repaid $200 million in debt, as discussed. We had proceeds from option exercises of $73 million and $10 million for that first dividend payment.
Investing activities for the full year, $263 million, or gross of the Nicaragua proceeds, $316 million. That was a bit higher than the original budget, because remember, included in there, $76 million of Fekola expansion expenses, which weren't in the original budget. We approved and announced those midway through 2019. We had other sort of main differences with Masbate were probably $12 million under budget overall, mainly due to Monjas West timing, the timing of mine lands acquisition, and development costs for Monjas West, which we're now incurring in the first quarter of 2020. Nicaragua, we were about $6 million under just because of the timing of the sale there, where $6 million hadn't been incurred before we sold it. Overall, end of the year with cash and cash equivalents of $140 million.
$400 million undrawn on the revolver and in good shape to go forward as we work to complete, firstly, the Fekola expansion through the year, and then also to fund our increased share now of the Gramalote budget, where we're planning to drill Gramalote out now in 2020 to feasibility stage and have a feasibility study completed by year-end. Our plan there is to earn back to 50/50 interest and also to, therefore, thereafter fund our share of the 50/50 JV expenses going forward. In total, in 2020, we've got $25 million in the budget for that. Overall, we're well-placed to fund all the current activities that we've got. I think that probably summarizes what I was going to talk about.
Okay, great, Mike. Thanks. Let me pass it over to Bill Lytle Senior VP Operations to give us a run through on the progress to date of the expansion of the Fekola mill and the new fleet.
Okay, thanks, Bob. Maybe just by way of introduction to the projects, I think everyone remembers last year, we were challenged to look at should we expand the mill at Fekola. We did a study which really showed optimizing the mill and increasing throughput was positive. As part of that, we looked at optimizing the entire facility, and one of the interesting things that came out of it was that the optimization actually indicated that we should also expand the mining fleet and bring some of the higher-grade ounces forward. That was approved in June of last year, and we immediately started ordering our mining fleet. It's important to realize that because for 2020, the keys for getting the 600,000 ounces really relates to the mining fleet and pulling those high-grade ounces forward.
I'm happy to say that on the mining side, the mining fleet actually is arriving on budget, ahead of schedule. We already have received our first big 6040 excavator. That has been commissioned and will shortly move into mining in phase VI. We also have received the first five of our 200-ton trucks. Those have been put together and will almost momentarily be put into operation as soon as we put some tires on them. That remains ahead of schedule. On the milling side, if you remember, we're expanding from 6 million tons per annum to a throughput of 7.5 million tons per annum at a budget of $50 million. Half of which was going to be spent last year and half this year. That again remains on schedule for a Q3 commissioning.
Obviously, we're currently watching all the issues related to the coronavirus, but we are still forecasting at this time that we will be on budget for a Q3 delivery of the mill. In addition to that, we've looked at expanding because of the throughput at the mill and some of the past outperformances of the mill, we want to make sure that the tailings facility had sufficient capacity, and so we actually called for a double lift last year, which would take us up into 2023 before it had to be lifted again. That remains on schedule and will be completed prior to the rainy season this year. We also looked at the success at Ouagounou, the solar plant, and the economics of implementing a solar plant at Fekola, and we approved last year a $38 million budget to expand the power plant by 30 MW AC solar.
That remains on schedule and on budget. We're currently looking at some of the equipment which is coming out of China related to the batteries, which may be delayed slightly. Overall, the solar plant will be started up at the end of Q3, and that solar plant is not needed to support the expansion. That's just better economics over the long term. Thank you.
Okay. Thanks, Bill. I think, with that, we'll turn it over to questions. We have the entire executive team here in Vancouver, so if there's any questions we can answer, go ahead.
In order to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Again, if you would like to ask a question, press star one on your telephone. Please stand by while we compile the Q&A roster. Your first question comes from the line of Lawson Winder with Bank of America. Your line is open.
Hey. Hello, gentlemen. How are you doing today? Thanks for taking the questions. Just on Gramalote, maybe, just looking at that project becoming more and more attractive to you, and then I compare it to the other three core assets in your portfolio where you are not only 100% in controlled operations but a majority owner. In the event that your partner were to be interested in tendering their half of that project, is that something that you guys would be interested in considering?
Well, I think both AGA and ourselves are very focused on getting to the final feasibility by the end of the year. There is a provision in our agreement. I think both AGA and ourselves believe that on a 50/50 joint venture, neither party should be able to block the development of a mine if it's economic. There is a provision in the agreement where after a final feasibility study, if we move to a development plan and present that to AGA, they neglect and opt to participate to 50%, there's a mechanism where each of us would appoint an independent financial advisor, and based on the economics of the feasibility/development plan, if they or we wanted to sell our 50% interest, there's a mechanism to come up with that. There's also a provision where they can drop potentially to a 30% interest.
We feel very confident that if Gramalote is a go, I think if its economics are good, I would expect there's a good chance AGA would want to participate at 50%, especially since we're going to do all the work. Secondly, though, there's a mechanism whereby we can move on. This is a big nut to crack in terms of the financing. We're liking the economics a lot, but we have lots of alternatives if that happens, because we could bring another partner in for 30% or whatever percent if we didn't want to take on the full hit. I think it's worth noting, though, it's still early. We've got work to do here to get to feasibility and a development decision.
If you look at the cash generation from us based on current projections over this year and the next two years is somewhere around $1.6 billion- $2 billion. Given the fact that we get feedback that third quarter of this year, we'll be in an extraordinary position to be able to finance projects going forward from cash flow.
Thanks very much for that, Clive. That's a very helpful answer. Then, just looking at your portfolio, there's one asset that you guys, or project rather, that you guys haven't spoken a lot about lately, and that is Kiaka in Burkina Faso. I was wondering if maybe you could just quickly update us on what your thinking is around that asset. Also in doing so, maybe comment on geopolitical risk exposure with that asset. Where I'm coming from is assuming the project economics were far superior than they are today with Kiaka, would building it be an obvious choice for you or is there an element of geopolitical risk in Burkina Faso now that would perhaps make you think twice about that decision? Thanks.
Well, obviously, all countries have some political risk, and unfortunately, Burkina Faso has had a lot of significant issues that concern all of us over the last while, whether it be the mining industry or in general. Safety of our people is paramount. I think we continue to evaluate the economics of Kiaka and see what kind of gold prices might make some sense. I think we're also looking to see the government continue to work hard, I think they are, to continue to improve security in the country. If we had Fekola in Burkina Faso, I think we'd be working very hard with the government to build it and ensure the safety of our people. We'll continue to evaluate Kiaka as we go forward. To be honest, if there was someone interested in a partnership on something like that, we'd probably consider that.
Otherwise, we'll continue to evaluate it. We'll monitor the situation in Burkina Faso and hope that it continues to improve. Unfortunately, Burkina Faso faces some additional challenges than the neighboring country, Mali, who's made a major commitment to improving safety with 10,000 troops being trained as we speak and further ongoing support from France and the United Nations, et cetera. Burkina Faso is a good country, really good people, and we hope that they have a safer future, and the mining industry can progress there. There are other operations that are looking to move forward. I'm sure safety is their first priority as well.
Okay, that's great. Thanks for your comments, Clive. I appreciate it. That's all for me.
Okay, thanks .
Again, if you would like to ask a question, press star one on your telephone. Your next question comes from the line of Chris Thompson with PI Financial. Your line is open.
Good morning, guys. Congratulations on a great year last year. Thanks for taking my questions. Just a quick point of clarification. Are we anticipating, I guess, revised mine plans for Otjikoto and Fekola in the AIF?
Yeah, we should have mentioned that. Who wants to take that?
The short answer is yes.
Yeah. The short answer is yes.
As part of the AIF, we will be updating those mine plans. I'm sorry. We will be updating the mine plans both at Fekola based on the latest resource, which came out in December, I think, of 2019, and then the approval by the board to go underground at Otjikoto. That'll also be part of the AIF.
Yeah, thanks for the reminder, Chris. The other thing, with the expansion of Fekola, of course, was based on the tremendous results of increasing Fekola. We came up with a new indicated resource recently at 6 million ounces. We mined 1 million ounces, so it's really 7 million ounces, and we started at, in resources, we started at four when we remained open. The expansion, still having a basically 10-year mine life even with the expansion. The expansion is showing to have been a great decision. I think that's one of the things that we're very proud of because obviously we're the bricks and mortars, but we maintain our entrepreneurial approach to this business, having expanded Fekola twice already since we decided to first mill, leaving the ultimate expansion and having a commitment to trying to find out if it was bigger as we were building it.
It's a great example of, I think, the way we approach the business is the success of Fekola having produced 1 million ounces already and going into this and just coming into the second expansion.
Great. Thanks for that, Clive. Just another quick question, I guess. Can you just sort of walk us through what's happening with the Snakes, the Snake deposits at Fekola?
Sure. I'll hand it over to Tom. You saw me put out some pretty intriguing results a while ago, Tom can give you a lot more detail on what the focus is there.
Yeah, Chris, the exploration at the Snakes right now is, say, threefold. We're expanding the satellite mineralization to the north with our C drilling. We are drilling Mamba to try and understand it and try and extend Mamba, the sulfide deposit Mamba, and then we will be looking at a couple other sulfide targets that are sitting underneath Anaconda and Adder. That'll be the focus for this year's exploration.
Okay, great. Thanks. Just a final question, guys, I hope you don't mind, but just Masbate, just a very, very quick comment on, I guess, the grade and metallurgical characteristics of Montana compared with Main Vein.
John, you want to chip that one?
Great. I believe we're going to average about 1.8 to 2 grams per tonne. Correct? We're expecting about 80% gold recovery, Chris, from Monjas West. It's top drawer, so no issues with throughput.
Okay. All right, guys. Congrats. Look forward to this year, mate.
Thanks, Chris.
Your next question comes from the line of Geordie Mark with Haywood. Your line is open.
Yeah, good morning, all. If I can maybe just extend the question from Chris' line of thought, particularly on Anaconda and the context of, I guess, rounding out Fekola, however many expansions there are now. The context of probably moving with the decision to go through to Gramalote next, and moving your owners team there and on the time commitments, I guess, and the cash flow required for that. Just wondering, holistically, how does the Anaconda potential or snakes fit within that in terms of human resource capital for development time frames, cash flow requirements to attribute to that in line with permitting? It's more of a holistic sort of midterm growth plan because you've already got obviously another peg there with Gramalote likely to come through, I guess.
Sure
Overall view.
Sure. Wave our arms a bit just to say if we come up with a positive final feasibility study at Gramalote and we make a development decision to proceed, then you're looking at about 30 months of construction. That's an 11 million tonne a big plant. We might be starting in the second half of next year, once again, if you wave your arms a bit. The team up will be ready to roll because they're going to be coming off finishing the Fekola expansion. That timing works out well. In terms of Anaconda, it's such early days, but there's a number of alternatives there. We're seeing the satellite now increase to six kilometers and before that at five kilometers of strike, we had 800,000 ounces at below ground.
As you know, it really doesn't require any blasting or crushing of the sorts because of the nature of the weathered rock of the saprolite down to 50 meters. We've always thought that as that's getting bigger now, we'll call it a new resource during the year here for the saprolite, and then that meant we've been looking at is that potentially a standalone situation or are there higher grade parts of the saprolite than there seem to be, well there are some, that you might truck down to Fekola one day, let's say after Fekola's first five years averaging 550,000 ounces a year. That's one of many alternatives would be to do that.
Tom tells us that we might be wasting our time to analyze too much of the saprolite because he's feeling cautiously optimistic, I think he said, Tom, about the potential of the sulfide below this huge area. You could be looking at a significant standalone mine, and you could look at that once again, arm waving, if Gramalote is a go, that could be slotted in after Gramalote. We don't build these things everyone on site at the same time all the time. As Bill always reminds us, you have your earth moving people come in first, and then they do their thing, and then they can be ready to go somewhere else. We're not going to take on building two plants at the same time. I don't expect us to change that strategy, but we have lots of alternatives on how to get there.
Obviously, Anaconda's behind Gramalote in the sense of where it is, in terms of the process of feasibility and permitting. Right now it would slot in behind that. There's many alternatives, especially having this huge mill down the road, 20 kilometers down the road, when you start looking at Anaconda. Bill, anything to add to that?
Maybe just to add that the part that's often forgotten is the engineering side, which we have a very good engineering team and it actually slots, I think, very nicely. If you look at what's happening at Fekola now, we do have some of our key engineers on site. They would in the third quarter or after be rotated over to Gramalote. That'd work very well. Once again, hand waving if it's a project, getting it into detailed engineering. Of course, that would also work very well to give Tom the time to finish up actually drilling at Anaconda and handing it over to the engineers sometime maybe in the second half of next year to really start looking at what's happening there. On the engineering side, it fits very well.
I guess just one final point that when you talk about Gramalote that we didn't mention, it's very, very advanced for allegedly a PEA, which we put out. We only put it out as a PEA because we were a bit surprised to find out that 45% of the ore body was inferred when that wasn't what had been advertised before. We have a slack of drilling to do of the infill drilling. I guess it's a very consistent ore body that Tom tells us. It's infill drilling. There's always a measure of risk, we think that we're hopeful that will be a success and give us a similar type of economics and grade as something we're looking at now.
In so many ways, it's so advanced, Gramalote, because AGA had it for 10 years and spent a lot of money, and quite a bit of it well. They do a lot of good engineering work, permitting work. They did a very good job dealing with the local artisanal miners, the community. We have a permit, they obviously did a good job. The nice thing about this is we're inheriting the Gramalote team, which there's a lot of very good people there. Rather than having to restart, let's say if AGA had sold out and we had to take over as operator from scratch, we'd be a lot further behind than we are today. In terms of metallurgy, and there's always a bit more work to do, but I think the team tells you they're feeling very comfortable with that.
Of course, it's got super cheap power between $0.17 a kilowatt hour in Africa. This is projected to be around $0.07 a kilowatt hour because of a nearby power line. You hear people criticize the grade. We understand sometimes the obsession with low grade no surprise, given the failings of many low-grade projects. Here you have a very low strip ratio. I think it averages two to one to the project and one to one at the start. Those are very attractive factors that actually forgive to some extent the lower grade. We could show you some 1.5 gram ore bodies with a huge strip ratio and some inferior metallurgy that would not have the economics that we're seeing in Gramalote. As we always like to say, nothing matters. Nothing matters in isolation, grades, strip ratio, logistics, all that, it all matters.
It's all about how it comes together. We'll know a lot more about Gramalote by the end of this year, a lot more, and quite a lot more I would think about the Anaconda area.
Great. That's a very reverse answer. If I can extend one more to Mike there. Just in terms of obviously free cash flow is going nicely, a reduction in the revolver balance, and obviously some future growth going forward with an elevated gold price. Second, the dividend payments coming out there soon. What are you thinking in terms of opportunities going forward to put in a specific NPAT ratio or something to garner exposure to rising gold price or just thinking about, obviously you're putting a lot of cash on the balance sheet and how you might look at using that going forward?
Yeah, I think we're looking at what we may do as we go forward. I think that maybe the way to look at it is we're going to get ourselves to more of a decision point later in the year on what we want to do. We'll have the Gramalote feasibility study by Q4. We'll know a lot more about Anaconda and what we're seeing from the drilling in Mali and have ideas about what we might need in terms of project finance there. Right now, we're using the funds to pay the debt down in the absence of having a larger dividend. We'd like to do that to Q3, and then obviously we can evaluate what our dividend policy is, what our capital needs are for Gramalote, and potentially a bit longer term out there, what our capital needs would be for Anaconda.
All of those things can be considered, and really, the first key decision point come up there will be the end of the year when we see what the Gramalote feasibility study shakes out like.
Yeah, over time, we'd like to see the dividend increase. As we said, we don't want to rush into that. We've got some capital expenditures and things happening this year. Let's get to the debt reduction. Let's get to the fourth quarter, and then we'll evaluate that situation. The objective here is to be a company that takes some of that hard-earned money earned by producing gold and uses it to find more ounces and develop some things that are in the pipeline, build more gold mines, but also at the same time reward our shareholders by giving something back. That's the strategy, and we've started that process, and we'll evaluate by the end of the year if it's appropriate to consider increasing the dividend, and of course, that partly speaks to gold price as well.
Okay, great. Thank you. Thanks. That's it from me. Cheers.
Cheers. Thanks.
Your next question comes from the line of Carey MacRury with Canaccord Genuity. Your line is open.
Hi, good morning, guys. Just another question on Gramalote. You've mentioned that the project's pretty well advanced. I'm just wondering, beyond the infill drilling, are there other opportunities that you're looking at there to potentially tweak the economics?
Sure. Tommy, do you want to talk about it?
First, just on the drilling, have to bear in mind that the PEA gold price is really at $1,100. When you look at higher gold prices, the Gramalote has the potential to get significantly bigger. Certainly it remains open as you go deeper in the project. We'll find out some of that with our drilling this year. As far as sort of other opportunities
Monjas, Trinidad.
There's other satellite deposits that we have not included in the PEA. We did not do that deliberately because we wanted to get to a decision point with this thing, with the feasibility study, and we just weren't going to get those drilled up to an indicated resource to be able to do that.
Yeah.
That could add to it.
The resource before it was vastly improved was not taking into account the Trinidad and Monjas West. The increase in grade is a little bit because of focusing on Gramalote Ridge. As Dennis said, and Tom said, there's these two other deposits or one deposit, one zone out there with these two. We're going to be doing a little bit of drilling on Trinidad this year, right?
Yeah, we'll be doing some drilling on Trinidad and then Monjas next year.
One of the odd thoughts we have is typical of our style of doing things, like for Fekola and Otjikoto, is we may look to the feasibility is positive and looks very good, and we go through a available decision is build for cheap expansion again, the mill, so that if in fact Monjas West and Trinidad come in and we want to crank the tons or whatever, we have the potential to do it. That's one of our strategies that I think sets us a little bit apart sometimes, and that's where we don't lose value by not exploring those now. We like the way to move forward, get going, get this thing built if it's appropriate, and then leave room to add more through if that pans out.
Maybe one more, just your thoughts on your relationships in Colombia. Obviously you've been there for a while, Anglo's been there for a while, just relative to the rest of your portfolio.
Well, so far it's been a great relationship. We've got some really good meetings coming up next week with Mr. Mines and other senior people from Colombia. The guys have been down. I'm planning a trip down soon to meet the government officials. Kelvin Dushnisky has done a great job there, and some of the people before him, of dealing with government. The social relationships in many countries, including Colombia, they're more and more important everywhere these days. I think AGA's set a good start there. Well, more than a start, they've been doing it for a long time. The relationships, the government, the president, their cabinet, Kelvin was telling me he met with the whole entire cabinet maybe 6 months ago or so, one year ago. They were very positive about gold mining, responsible gold mining.
Then you've got Antioquia, where the new governor of Antioquia, recently elected, so mining in his family background, and he's come up very pro-mining, and so has his minister of mines and others. All the indications are, the questions we get asked when the guys are down there, the questions are, "When are you going to start? When are you going to start building this thing?" We also have to hit the ground running, as I said, with having the Gramalote team. We've also Dale Craig, who's a VP of operations here and who was the country manager a long time ago in Nicaragua, and then came up to Vancouver and assumed more senior position. Dale put his hand up and volunteered to go down to be the country manager, in Colombia, which is fantastic.
We've got one of our very experienced guys at the helm there, being well supported by all of us, of course, here, and a good team underneath Dale. So far, that part of it is very encouraging. It seems that there's a real push from the local people. They've done a good job with the artisanal miners there. Everyone's on board to move this thing forward, and we'll continue to work with what we've done all of our careers, fairness, respect, and transparency and accountability in the way we deal with local governments, federal governments. I know the government is very happy to have a Canadian company, from what I've been hearing, at the helm of this one, and there's a great Canada-Colombia relationship. Don't forget, we were the operator here before, so we have some history with them as well.
So far, the economics have to be there, it seems like this would be the best place in Colombia to build a gold mine, being in an old mining district and all these other positive factors we're talking about. That's looking very good.
Okay. Thank you very much.
Cheers. Thanks.
There are no further questions at this time. I will turn the call back over to the presenters.
Okay. Thank you, everyone for joining us. It's obviously a bit of a challenging day given the meltdown of the gold price and the gold equities, which is perhaps a little bit surprising. We see these liquidity crisis, I guess, sometimes as we move through life and through business. We said that we didn't build this company based on the fact that gold had to be higher. This is a hell of a company at whatever gold price, really, almost you want to pick, in terms of historic prices for the last while. We're excited about the future, and we look forward to continue to deliver for our shareholders and all our stakeholders on the promises we make. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.