Okay. Just run through the disclaimer, Camilla. Now we're gonna run through about a 25-page presentation. A lot of it's gonna be pictures. Let's go through that presentation, and then at the end, we will have an opportunity for questions. As I said, I prefer people to do questions, you know, verbally at least, 'cause then you pick up the nuances better. If you're feeling shy, you can raise your hand and type a question, and we can try and do it that way as well, okay? Okay, by way of introduction, I'm Mark Learmonth, Caledonia's Chief Executive. Prior to that I was a CFO, as you may well know. I'd also like to take some time to introduce Victor Gapare, who's an executive director, joined the group in January following the acquisition of Bilboes. I'd just like to give Victor an opportunity to introduce himself, please. Victor?
Thank you, Mark. My name is Victor Gapare. I worked for Anglo American Corporation Zimbabwe for 16 years, and my last job in Anglo was Director for the Gold and Pyrites Mining Division. I left Anglo American at the beginning of 2003 after I had completed the management buyout of the Gold and Pyrites businesses, which I was managing at that time. From January 1, 2003, I became the Chief Executive Officer of Bilboes. I've been Chief Executive of Bilboes until we completed the transaction with Caledonia in January 2023. Between 2009 and 2011, I was also President of the Chamber of Mines of Zimbabwe.
Basically the Chamber of Mines is the organization which represents organized mining in Zimbabwe, and it includes suppliers and service providers to the mining industry, as well as professionals in the mining industry. During the time, over the last few years from really from 2010, I led the Bilboes team, which raised the first $6 million from Baker Steel Resources Trust, which is listed on the London Stock Exchange. We used that money to carry out exploration, to begin exploration at the Bilboes properties. In 2013, we raised a further $10 million, which helped us progress the feasibility study. Also in 2013, we also raised another $7 million debt from the Industrial Development Corporation of South Africa, which enabled us to restart our operations after we had closed them during the hyperinflation period. Basically that's a little bit about me. Thank you, Mark.
Good. Thank you. Thank you, Victor. Chester Goodburn, who replaced me as CFO last year. We've got Dana Roets, who's the Chief Operating Officer, been with us for about 10 years now. Maurice Mason, Vice President of Corporate Development. Adam Chester, our General Counsel, and Camilla Horsfall, who is Vice President, Group Communications. Let's get into the meat of the presentation. Just in terms of results highlights, production all disclosed previously, increasing from about 58,000 ounces in 2020 to just over 80,000 ounces in 2022, which is good. We've not been helped much by the gold price, so all the increase in revenue is largely driven by higher production.
Gross profit up from $46 million to $54 million to nearly $62 million, but you will notice there has been a slight compression in the gross margin from about 46% in 2020 to 43% in 2022, and that reflects the general increase in our operating costs offset by economies of scale. Then I'd also draw your attention to the dividend, which we've increased from $33.5 in 2020 to last year we did $0.56. Again, more information about that later. Okay? All of this we'll come into more detail later. Just a few words on safety if I may. Very unfortunately, we had a fatality in 2022 and a further fatality in 2023.
Dana may wanna talk about this more, but it's fair to say the fatalities resulted from non-adherence to prescribed safety procedures. Our response to that has to be to redouble our attempts to enforce adherence to safety procedures. Clearly fatalities are very distressing events, but we just have to work harder to try and make sure that people adopt the safe working practices that we set out. Other than that, our general safety performance compares quite well with other similar deep level mines in the gold sector. Dana, would you like to add anything further to what I've said there?
No, Mark, I think it's just important to also note that we were in a build-up phase in increasing our labor numbers, which complicate things. I think a good indication of, you know, we actually improved our safety record from 2021 is the fact that. The fact that our Disabling Injury Frequency Rate, which takes the extra number of employees into account, year-on-year improved from 0.26- 0.23.
Yeah. Like I say, it does compare. If you compare us to other gold producers, and I've got to say, not many of them produce information of this granularity. We actually perform quite well. Should we just move on and talk about the operations? Dana, can I ask you to just talk to the next couple of slides?
Yeah, Mark. Similar to what I said about safety, we started a build-up process in basically 2015. You can see the data on the graphs. We completed that build-up last year. It was a steady build-up over the last seven, eight years. Hopefully this year we can get into steady state. We had record production because we're in build-up. We achieved our targets of 80,000. We told the market the higher end of our forecast. Now it's time to settle down and optimize and try and improve economies of scale.
It is, it is fair to say if you look carefully at the production, quarterly production numbers in the, in the lower graph, you would notice there is in general, quarter one is lower than quarter two. Production tends to progress as the year progresses. We'll probably see the same pattern again this year with lower production in Q1 than peaking in production in Q4. That's all of our questions. All I want to say is that the grades remain consistent of about 3.36 grams a ton. The recoveries remain consistent at 93.9%, 93.9%. The real driver of growth has been tons milled.
As Dana says, our objective now is to stabilize production at between 75,000 and 80,000 ounces a year, having done that, see what we can do to what we call optimize it. Look at ways where we can do what we do, but just do it more efficiently and therefore control our costs. Okay? Should we move on? The solar projects was something that we started out in 2020. That was clearly delayed by Covid, by, you know, delays in the manufacture of the panels in China and then the shipping of the panels. It was finally commissioned in November last year. All the way through that period, I'm afraid the grid deteriorated.
Particularly in the course of 2022, we found ourselves spending more money on capital equipment to protect our own equipment from voltage spikes. We have to spend more money on diesel and maintaining generators. It's worse in October, so immediately before we commissioned the solar plant. We were using about 720,000 liters of diesel a month. You know, at a diesel cost of about $1.50 a liter. That's considerable. By January this year, as a result of the commissioning of the solar plant, and also it's gotta be said, as a result of improvements in the grid and, you know, grid supply. In January, we only used, I think, about 18,000 liters of diesel.
A very substantial reduction in our diesel consumption. Now, I am comparing peak with trough, you know. Even so, if you take the average consumption over the course of 2020 with a reasonable expectation of an average production, of average diesel usage going forwards, we will expect to see a reduction in diesel consumption. Also the benefit of solar compared to just an average cost of electricity supply. That works out at about $35 per ounce produced, so approximately 5% of the on-mine cost. It's fair to say we funded the whole solar project, which cost about $40 million, using equity, which we raised in 2020 from New York, the excess we funded, we funded ourselves from cash.
It's inappropriate really for a business of that nature, a solar business, not to be ungeared. We are now completing an exercise to raise a bond in Zimbabwe by the vehicle that owns solar. We're looking to get about $7.5 million in by the end of March. I think, Chester, correct me if I'm wrong, I think we've got about $4.5 million in at the moment, and we're probably expecting another $2 million in towards the end of sometime this week. I don't know if Chester's on the line, but is that correct?
That's right, Mark. Yeah. Received four and a half by two and a half between space should be in by the end of this week.
Again, I. There's nothing. We don't really specifically discuss politics, but it is interesting to compare the way that the Zimbabwean authorities have responded to the same electricity crisis that also exists in South Africa. Whereas the South African government appears to have done very little to help facilitate or encourage large industrial users to put in place their own IPPs, by contrast, the Zimbabwean authorities were very proactive in terms of encouraging and facilitating and fast-tracking the approval process for things like our solar project, and facilitating the movement of the equipment across the border. Then another development which is current is through an initiative called the Intensive Energy User Group, IEUG, which has been established under the auspices of the president himself.
We now hopefully move into a situation where Blanket can enter into an agreement to import power directly from Zambia or Mozambique, which may have certain cost advantages but will further reduce our reliance on the grid. Again, that's a development that you would be unconscionable and unexpected in South Africa. Just interesting to compare in practical terms the way that the Zimbabwean authorities have tried to help people find a solution to the same problem that exists in South Africa. Shall we move on and talk about some other bits? I think we're gonna talk about Bilboes now. Could I ask Victor to run us through a few slides on Bilboes, please?
Thank you, Mark. As I already said, Bilboes House is the gold mining assets which used to belong to Anglo American Corporation Zimbabwe. Anglo mined oxides and treated the ore through the heap leach technology, pretty much recovering. In fact, between the time they opened the mines to the time, we finished mining the oxides, they mined about, we've produced about nine tons of gold from the Bilboes assets. Anglo had also started exploration for the sulfides, which is what you find below the oxides, and they drilled about 17,000 meters and established an inferred resource of just under 500,000 ounces. They stopped the exploration when they were getting out of the gold mining business all over the world, and that's the time when we bought the assets in 2003.
Between 2010 and 2018, we drilled a further 80,000 meters and established a resource of just under or just over 3 million ounces. We also contracted DRA to actually carry out a definitive feasibility study on that resource. At the end of the feasibility study. Please can you move to the next slide? At the end of the feasibility study which we which was completed, DRA spec'd the mine with a life of mine of 10 years, with a planned average production rate of 2.4 million tons per year and a planned average mill feed of 2.3 grams per ton. That kind of grade for an open pit deposit is actually quite a good grade.
We are expecting a life of mine gold production of just under 1.7 million ounces and an average life of mine production of 167,000 ounces per year. Actually, at peak, we'll produce 200,000 ounces per year. The peak funding requirement for this project is $250 million. This is at 2021, end of 2021, prices. The project economics, basically at a gold price of $1,650 per ounce, the project has a post-tax NPV of $323 million, a post-tax IRR of 33.4%, and an all-in sustaining cost of $826 per ounce.
If you just use the current gold prices, maybe if you upgraded that to about 1,800, you can actually see the impact on the bottom line, basically. In the meantime, when we were doing the exploration for the feasibility for the sulfides, we actually also established some remnant oxides, which we have started mining. That picture on the right there is actually the current mining, which is taking place at Bilboes. We expect to produce about 12,000-17,000 ounces per year from the current site operations. That project is a life of about two to three years. At that rate, we should be able to harvest over the three-year period, maybe somewhere between $20 million-$30 million as free cash from this operation.
Okay. Talk about Bilboes. Sorry, Motapa.
Thank you, Mark. Again, Motapa is a property which is contiguous to the Bilboes assets. Actually, in the 1990s, Anglo entered into a joint venture with the original owners of Motapa. It actually mines the oxides from the Motapa claims. They also started drilling for sulfides because the idea was that with the sulfides which were expected at Bilboes and the sulfides at Motapa, we should be able to establish a mine with reasonable scale by Zimbabwe standards. Anglo also stopped any work on this when they were getting out of gold at the end of the 1990s. The current Bilboes team actually went on the Motapa project because some of the mining which was taking place there, the oxides, some of them were being transported to the Bilboes heap leach operations.
The current plan is actually to put in some money, start exploration, hopefully get some oxides because we do know where the target is. We have some targets for oxides. Maybe if we establish the oxides, complement the oxides which are being mined at Bilboes, it actually hopefully improve the cash flow from that operation. Long term, the idea is to actually carry out exploration for the sulfides because we believe if you combine the sulfides at Motapa and the sulfides at Bilboes, you can actually get a mine scale with economies of scale in this area.
Okay. Sorry to interject. Just before we move on to the financials. By itself, Bilboes is a very attractive asset. It's relatively large, it's relatively high grade, and we acquired it at a very, very competitive price. The work we're doing on our own feasibility study isn't just to revalidate the feasibility study done by Victor and his team to reflect current environment. We're also looking to see whether it's possible to do that project on a phased basis with a view to minimizing equity dilution. There's always gonna be a balancing act between achieving growth and minimizing dilution. You get- w e're solving for the best net present value per share, not the potentially highest NPV of the project.
I think that's quite important. Bilboes together with Motapa really is potentially a very, very attractive asset. The nice thing is that we've got the same geological team at Bilboes who successfully identified the resource base at Bilboes, and they can transfer their skills and experience and using pretty much the same infrastructure that they've already got at Bilboes to go and start looking across the road at Motapa. That's one of the reasons why we wanted to accelerate that process by having the modest equity raise that we completed last week. I'll come on to that a bit later. Frankly, Bilboes and Motapa together. Our outstanding asset package. I think, should we just move on and talk about the financials? Chester, are you able to just give us a couple of minutes on each slide, please?
Yeah. Thank you, Mark. 2020 financial results very much reflects the success story of the 80,000 ounce target we set ourselves at Blanket Mine, and also sets us up for our future growth phase of our newly acquired mining assets, as Victor here explained. When looking at the revenues, I'm pleased to see that it's increased. It's an increase that increase in ounces at Blanket Mine. Later on, we'll also see in the cash flow statement, the increase in cash generation because of that. Production costs during this growth phase has remained in check. You'll see that this occurred during a period where our peers had significant increase in inflationary costs. Let's talk about production a bit later. Our G&A has increased, for positive reasons.
We've increased costs and expenditures on our advisory services cost to acquire Motapa and Bilboes. We've also increased our salaries and wages bill of our senior staff members to set ourselves up for this new future growth phase at Caledonia. Our profit after tax includes non-cash items such as $7 million of deferred tax assets, tax expenditures, in our tax expenses. We've also got foreign exchange losses that are unrealized, also non-cash, and this might fill the Howie's question on why the EPS is different to the adjusted EPS of $2.20 per share. Also included in that is impairment expenses of $8 million that we've incurred on areas above 750 meters that are mined out and currently not in our life of mine plan.
Can move over to production costs, please. Our production costs are looking good. Costs decreased on a per ounce basis due to the increase in ounces. It went down from $742- $735. With this we've increased our wages and salaries in absolute terms. That's due to high bonuses paid in Zimbabwe for our online staff due to the higher production ounces that we've achieved. Consumables, they increased due to inflationary pressures and unforeseen maintenance. I'd also like to highlight electricity expenses that's come down due to the solar plant was connected to the Blanket Mine grid in November. Also, it shows a decrease due to transformers that we've installed at the Blanket Mine, improving our power factor and also reducing our kWh usage. We move on to the next slide.
Our G&A, our admin costs were higher due to the advisory services fees to obtain the Bilboes and Motapa assets, as explained earlier. You can also see the salary expenses that has increased to help us to unlock the value at Motapa and Bilboes Mine. Can we move on to the next slide, please. Taxation. Most of our tax is paid in Zimbabwe to the Zimbabwean government. It's got a very large non-cash component of approximately $7 million. It's very difficult to reconcile this back to our US dollar-based profits as the taxation calc is formed in ZWL. Moving on to cash flows. I'm pleased to see the net cash from operating activities increasing by $12 million due to the increased ounces.
We've balanced the reinvestment of those cash flows with returning money to our shareholders, pointing that we can realize cash returns from our Zimbabwean assets and reinvest that in initiatives such as the solar plant and the new mining assets that we obtained. Moving over to the statement of financial position. You can see here that our non-cash, our non-current assets increased, and that's due to the investments in the Central Shaft, Bilboes, Motapa, and the solar plant.
Our cash has come down due to this, but what is important to note is that our balance sheet remains conservatively geared, and that enables us to obtain potential funding to unlock the future growth phase. In summary, cash generation was up in 2022. A good balance was achieved in reinvesting cash generation and new assets while distributing cash to our shareholders. It's also very exciting to see that our balance sheet is in a good position to enable us to unlock our future opportunities.
Thank you, Chester. Calon. Can I just have a few words on the fundraise that we did last week in conjunction with the announcement of the 2022 results. We raised about $10 million in London, and that was through an accelerated book build. That was primarily to allow us to fast-track, we'll get going on some of these new properties that we've acquired. In particular, you know, the feasibility study at Bilboes, kickstart the exploration project at Motapa, where we're hopeful, not just the long-term objective of finding significant sulfides, but maybe also the potential to find some near-term oxide material that we could turn into cash quite quickly.
We need to establish a what we call a shared services center in Bulawayo, which will allow us to begin to realize the synergies of having Blanket in the south, towards the south of Bulawayo and Motapa and Bilboes to the north of Bulawayo, by having a shared facility providing, you know, things like financial accounting, HR, technical services, and a procurement and goods receiving facility, so that we can actually try and realize some synergies there. Then finally, just initiate some exploration work at Maligreen. It won't be lost on you that our net cash position at the end of December was about $1.5 Million .
It's fair to say that we, whilst Blanket is highly cash generative, you know, we have effectively been using Blanket as a piggy bank to fund strategic activities that don't relate to Blanket. In particular, the initial purchase price of for the Motapa, the fees that we've incurred on, which were quite substantial because the complexity of the transactions on Motapa and Bilboes, and then historically, looking backwards further, the acquisitions that we made of Maligreen and also the when we looked at things like Connemara North and Glen Hume. We did a modest raise. We're looking for about $10 million in the U.K.
Why we chose the U.K. is we wanted to do something relatively quick. To do something in the States would have taken quite a bit longer because the SEC re-registration requirements. Also it's fair to say that we wanted to give the U.K. a chance to see if it works or not for us. We've spent a lot of time and effort over the past years marketing in the U.K., we wanted to see whether there actually was, just test the strength and depth of demand from institutional investors in the U.K. I'm pleased to see that we got three new institutional investors on the register who are mining specialists and will hopefully, they recognize the vision going forwards and hopefully will provide further support for us as we go forwards.
It was done at a difficult time when our share price shot up early in the week of marketing and then stabilized. The issue price was about a 3% discount to the 20-day VWAP. That's where we are on the fundraise. The Zimbabwe raise, approximately $3 million, is still open. That is to allow time for Zimbabwean institutions to get their liquidity in place so that they can participate. The nature of the investment climate in Zimbabwe is that whereas institutions have appetite to invest in us but don't always have the money available at the right time. They need a bit more time to be able to sort of shuffle things around and subscribe. That's the fundraising.
Can we just turn to the dividend? This is old news really. We've paid a dividend for about 10 years or so. Initially it was denominated in Canadian dollars when we were a Canadian company until 2016. It was about, it was about $0.07 per share per quarter. In early 2020, we started, as we were getting closer to the end of the Central Shaft project, and we were more comfortable with our cash flows, we felt able to loosen the purse strings a bit, and so we started increasing the dividend by about $0.01 per quarter. We paused in March, April 2020 to just allow us time to see what the effect of COVID was on the business.
Once we'd done that, we then felt comfortable to continue the rate of increase. By the time we got to January last year, it became apparent to us that we knew we were gonna be moving to a situation where we were gonna get our hands on new assets, and that would put us into a position of becoming more of a growth company with a requirement for capital. In that situation, we felt it just disingenuous to continue to increase the dividend further. The dividend policy, just to put it simplistically, is our dividend policy is to pay a dividend.
Our intention is to maintain the dividend at current levels, about $0.14 per share per quarter, keep it at that level, and then as and when we bring new projects on the stream and they become cash generative, then to resume dividend increases. For the foreseeable future, I wouldn't expect to see any increase in the dividend. Having said that though, barring any unforeseen eventuality, I wouldn't expect the dividend to be reduced. Should we move forward for-t his is extracted from an RNS we put out in January. Gold production for Bilboes is from the oxides, is approximately 15,000 ounces for the year. We say between 12 and a half and 17,000.
A Blanket, between 75,000 and 80,000 ounces. That would be for the year in it, between 87,000 and 97,000 ounces. On-mine costs. On-mine costs, we need to be a little bit careful about how we explain this because the on-mine costs of Blanket, having looks to be in the order of what, $770-$850 an ounce. That's quite a wide range because it is, it is fair to say that we are experiencing some input inflation, and it's difficult for us to predict where that would end up. Well, at Blanket, at Bilboes, the on-mine cost of Bilboes will be considerably higher because that is a low grade oxide project.
Cash generative, you know, much higher cost in terms of the cost per ounce. Blending those together, the on-mine cost of Bilboes of what? $1,200-$1,320, plus the on-mine cost of Blanket of what? $770-$850, gives a blended group on-mine cost per ounce of about $900-$1,000 an ounce. That is clearly largely skewed by the effect of the Bilboes oxide. It's also fair to say that the cost, the on-mine cost per ounce at Blanket of $770-$850 doesn't reflect the benefit, the $35 an ounce I referred to earlier. It doesn't reflect the benefit of the solar plant because the solar plant is owned by Caledonia, not by Blanket. We own 64% of Blanket.
The idea is that we Caledonia sell power from the solar project to Blanket at a price which reflects Blanket's long-term average cost of electricity, which means that the minority investors in Blanket are neither advantaged nor disadvantaged by the solar project. The benefit of the $35 an ounce is reflected at group level in the all-in sustaining cost, which is between what? $1,150 and $1,250. If you were to reverse out from the all-in sustaining cost the effect of the on-mine cost at Blanket, the all-in sustaining cost, excluding Blanket, would be in the order of about $1,000 an ounce, which is about, you know, 1% or just 1% or 2% higher than the cost that we incurred in 2022.
I just think it's important to put the projections for our costs in context with the short term effect of the Bilboes oxide project. CapEx for this year is gonna be about $31 million on a group level. $28 million of that is at Blanket. Of that 28, about $10 million is gonna be spent on a new tailings facility. The old tailings facility is now pretty close to its maximum capacity, and we will need a new facility which will set the business up for the next tens of years, but we need to get that up and running before the end of this year.
There's gonna be another $10 million or so spent on deep level capital development at Blanket Mine, which is the effect of the horizontal development from Central Shaft at very low levels to allow us to continue production and also give us platforms to resume our deep level exploration. I think that is a relatively quick canter through the formal presentation. We can open that to questions.
Shall we deal with some of the written questions first, Mark? There's a few. If anybody else has questions, they can just raise their hand and we can deal with those as they go. The first one, two questions from Howie regarding earnings. Well, partially, I think Chester's already answered that in terms of the difference between adjusted earnings and cash earnings in terms of, you know, did we earn $2.20 or $1.36? I think Chester's already dealt with that in terms of adjusting out the non-cash items. The second part of the question is how do you justify the sale of stock for six times earnings and a relatively expensive cost of equity? Mark, I don't know if you want to take that one.
As I've said, it was a very modest raise. It was done to test the strength and depth of the London market. It was to make good the treasury that we'd raided late last year to fund strategic acquisitions. It's got to be fair, you know, we can't determine the rate at which transactions come along, and ideally, we would certainly have done the Motapa deal a bit later, but the opportunity presented itself. The internal rate of return on the main Bilboes project is substantially higher than, you know, it washes its face. It's not something we choose to do every day of the week, but we're comfortable with having done it.
Thanks, Mark. Some questions on costs. A question on what percentage of costs are expected to increase in 2023. There is a slide 20, which is on our website, which details cost guidance for the on-mine cost and the all-in sustaining for the group and per asset. Shareholders can look there if they're looking for cost. Chester, I don't know if you have any comments on cost increase and what we're expecting this year on budget. I mean, we have already given guidance. I don't know if we can say much more than that.
I think that cost balance numbers will increase due to the oxides that would add cash to our Blanket, and perhaps skew the numbers a bit. At the Blanket level, we're looking at a 4%-10% increase, and we've got some savings that are not in there, via the solar plant efficiencies.
Yeah. We are seeing a reduction. Just to amplify what Chester is saying, the benefit of solar isn't reflected in the on-mine cost. The benefit of solar is reflected in the all-in sustaining cost for reasons I've just explained. Having said that, the solar is displacing what was previously a much elevated use of diesel. By displacing diesel, we are gonna hopefully see a lower electricity charge at Blanket than we had done previously. Labor, we pay our labor in U.S. dollars. I think we'd probably see modest inflation in our labor rates. The way the chamber works now is the Chamber of Mines and the sort of the collective bargaining system, I think, are on a quarterly wage renegotiation. That I don't expect too much damage there.
Where we are in the same position, I think as all other gold producers is the inflationary effect on inputs like steel, explosives and what have you. we've got to rely on our quite efficient procurement business based in South Africa to be able to get the best price. That's only Consumables only reflect a third of our costs. The other third, labor, we got hopefully subdued inflation. The remaining third, electricity, we may even see a cost reduction. In terms of the all-in sustaining costs, as I just explained, if you strip out the effect of the high cost operations at Matabe oxides, we're looking for the all-in sustaining cost to increase from just below $1,000 to approximately $1,000 an ounce. That's excluding us if you strip out the effect of the Bilboes oxide. Some cost increase, but I don't think enough to get alarmed about.
Thanks, Mark.
Sorry, a question. Right. I'm very pleased that Chester can talk about the tax rate. Our tax rate, as the previous CFO, I don't think Chester made the point clearly enough. The bulk of the tax we pay is tax in Zimbabwe, okay? The Zimbabwean tax computations are done on the basis of local currency denominated accounts, okay? We actually report our accounts in U.S. dollars. If you then try and reconcile the U.S. dollar tax charge back to something that makes sense to you, it won't work because the actual underlying calculation is done on the basis of different, of a completely different currency, which means that you've got very different realized exchange gains and exchange losses. I'm very happy to hand that over to Chester for further clarification if you can, Chester.
Yeah. I think I'll leave the fact that it's calculated in Zim dollars. I think you explained that well, Mark. Also something would be non-cash items that we don't get a deduction for, like impairment expenses of approximately $8 million. You don't see the benefit of that in the profit before tax. Unrealized foreign exchange losses, that's also deducted before profit before tax. You'll note that the deferred tax is a very big component of our tax expense. That's a non-cash item. Approximately $7 million.
Yeah. We also There's other two areas of inefficiencies in our tax structure. The first is withholding tax, and that's withholding tax as we move money around the group. In particular, we incur withholding tax on the management fees paid from Zimbabwe to South Africa. Further, we incur withholding tax on the distribution of dividends from Zimbabwe up to the, up to the U.K. The second, the second area of- We are looking to- We also end up paying tax in South Africa on intercompany profits made in South Africa. The, the tax in South Africa on intercompany profits is primarily from our procurement business.
To try and minimize that, we are setting up a procurement business focused on Bilboes, so it will service just Bilboes, based in Dubai, so that It's a lower tax regime than in South Africa. We can't move the existing procurement business from South Africa to Dubai because that would be a deemed disposal, which would give rise to South African CGT. The other area of tax sort of inefficiency is the fact that the top company is based in Jersey, where the tax rate is zero, and so it means that expenses incurred in Jersey don't have any tax relief. I think all of those things together explain why our headline tax rate is quite high.
Having said that, the underlying tax regime in Zimbabwe is, A, very stable and, B, is quite sympathetic, in particular because you get a 100% capital allowances in Zimbabwe for capital expenditure in the year in which it's incurred. Okay? That's the tax rate. Question here about EPS. We don't give EPS guidance. We used to, and it just became an absolute nightmare because there were so many variable factors that we cannot control. Things like foreign exchange gains, foreign exchange losses. A few years ago, you had the export credit incentive scheme, you know, which saw us being paid a premium. It just became. We ended up chasing our tail in terms of trying to reconcile and explain stuff over which we had no control.
We give guidance as to production, costs, CapEx, and you can make your own view on the gold price. Everything after that, frankly, you'd have to take your own view. We found ourselves just getting into ever-decreasing circles on that, on that, I'm afraid. Question on interest rates on the bond. Look, Andrew Cook asked a question on the interest rate expected on the bond. Chester can provide details of that, but I would caution you that we're talking about, you know, the financial. We're not talking about Wall Street. We're talking more about sort of Robert Mugabe Avenue. The sophistication of the Zimbabwe capital markets is not as advanced as it would be elsewhere.
You know, there is appetite for green bonds outside Zimbabwe, but this is a purely domestic issue, and I don't think it's particularly tinged green. The reason we're not offering those bonds internationally is that then we would be expected to provide guarantees as to future ability to externalize capital. We're not in the business of backstopping future government policy over which we've got no control. Chester, do you wanna talk more about the terms of the bond, the bond raise?
Yeah, it's 9.5% per annum. We pay interest twice a year. The tenure of the bond is two years. Availability of options were limited, and green bonds, as Mark said. You know, were not available in country.
Okay. A question regarding mining conferences. I mean, one of mine- Which mining conferences are we planning to attend? You will notice from the analysis of G&A that the investor relations cost has increased quite substantially. I'm trying to find the right numbers, but it's in here somewhere. That reflects a return to face-to-face conferencing instead of video conferencing. Which, now, we'll just make the general point that, you know, we have to do these things, but they are very, very expensive. We are trying to be much more selective in terms of which conferences we go to and which ones we pass on, because some, frankly, are very good and some, frankly, are less good. Camilla, can you give guidance as to which ones we're currently planning to do? I just can't remember offhand.
In London and Europe, we are probably gonna do the London one-to-one in November. I don't think we're gonna do the Precious Metals Summit there in Zurich. At the moment it's just the London one-to-one.
Also, that's just in Europe and U.K., isn't it? We'll also be going to the Denver Gold Show, which we found very good.
Denver and Beaver Creek as well.
Yeah.
The one-to-one in June.
Yeah. I got it. I think it's fair to say that we don't Some of these U.K., European-based events are a little bit anemic compared to the U.S. events. Whilst it's not particularly expensive for us to get to Europe, the registration fees for these things are quite expensive. You just gotta be sort of circumspect about where you spend your money. The CapEx estimate for 2023 we've already set out is just over $30 million, of which I think from memory about 28 is at Blanket Mine. The bulk of that comprises the first phase of the tailings facility and continued capital development. The difference between the CapEx at Blanket Mine and the group CapEx will be the capital expenditure at Bilboes. The grade. Dana, would you wanna talk about the grade apparently coming down at the full grade expectation to come down?
Mark, it's, if you look at our measured and indicated resource, which is what we've got high confidence in, the grade is not coming down sharply. I don't know where this is coming from. Then, if you look at our inferred resource, with the latest update we did, the grade did come down, but it's also because of the high grade gold price and the cut-off grade that came down. A lot of low-grade resources were added-
Yeah.
-which would skew the picture.
Yeah.
You know, the grade is going to be stable going forward, you know, coming down slightly because of, not a higher gold price, but there's no serious grade issues that we see.
Chester, would you like to address this question of the significance of the impairment of the assets above 750 meters?
No, I think.
Will we be closing access to that area? Will that have any impact on resources and reserves? Would you like to address that?
Sure. Yeah. Commercially, it bears no significance. it's a non-cash item. It was areas of capital development above 750 m, not in our life mine plan. We were thinking that, you know, we might be able to explore a bit more above 750 m. That would be a bonus. Being able to justify that, we wrote those areas off. This got no effect on value. It was never in the life mine plan, never in our plan cash flows.
It is fair to say that we do still intend to go exploring above 750 m. We've just not got round to it because of, you know, because of logistical constraints and that we've focused on production. We've had some capacity constraints in terms of the personnel, our exploration personnel. If we do go exploring there and if we find more material, you'll find that those impaired assets are de-impaired. Fair to say. We've got a question. I don't know if you can see the question, Victor, but quite a detailed question about the oxide heap leach process. Vic, are you able to provide more context on that, Victor?
Thank you, Mark. Dana, you can come in if you want. Basically at Bilboes we've got two crushing plants, one at Isabella and one at McCays. At the end of the day, what we are doing is really mining remnant ore. What we have put in the plan is probably to achieve an ore crushing rate of around 40,000 tons per plant. Basically, mining from those two locations. We are expecting a production of maybe around 40-45 kgs per month. Basically.
Yeah. I've got it. The, the variation, the variation in the production is largely because of variation, anticipated variations in the, in the grade that we're gonna be putting on there. I think, I think it's fair to say that there's, one of the questions is, you know, what's the how much material is already on the heap leach that can be leached? My, my understanding is that heap leach is pretty much exhausted. It's been leached so many times. We really need to.
Actually, yeah. Mark, when you look at it, you know, as we mine, we place the new ore on top of the old ore, and you continuously leach that ore. Basically, that ore has been leached a lot of times, but you still have remnant gold there, which is probably locked up in maybe some boulders, which when Anglo started the heap leach operations, they didn't crush the ore. When we have tried to crush that ore, the problem is always that you get the sands, the finer material, which then results in problems in terms of leaching cycles.
I gotta say, this oxide thing, it's a little bit more than a red herring. I don't want people to get obsessed about it because the real focus of Bilboes as an asset, as a Motapa is the larger sulfide project. The oxide heap leach project at Bilboes will produce, I think you said 45 kg a month. You just multiply by 30, gives you an approximate conversion.
No, Mark, if I can come in there, we are building up to about 2,000 ounces, by the end of the year.
Wow.
As you said, it mustn't be seen as a red herring.
Yeah.
It's interim arrangement because we've got some oxides that we've gotta go through anyway to do the sulfides. It's a, it's sort of an early start of the sulfide project.
Yeah.
It's also just helping us to cover the cost and cover the cost of the feasibility study, until we really start the project.
Yeah. It'll make it should make about $1 million a month, perhaps for say, 2.5 years, based on what the we the resource the oxides that we know exist. Please, I don't want people to start sort of thinking that we spent effectively $65 million on a project that is producing at best, sort of, you know, 1,500 ounces a month, 2,000 ounces a month. That's not the case. That is actually unexpected cash flow that we haven't factored in into our evaluations. A question about any plans to improve the liquidity of the shares in the VFEX. Our shares may have traded once on the Victoria Falls Stock Exchange.
You know, I don't know what we can do about it. It's down to our brokers to make it work. You know, You can't create liquidity without the existing owners selling. We need to get the existing owners to sell, but they don't wanna sell. They seem to be wanting to accumulate positions. I'm not sure what we can do about that, but I've got to say, it's not something that particularly keeps me awake at night. You know, Our position in Zimbabwe is such that we have institutional investors who want to buy our shares as and when they have liquidity that's available. Okay.
There's a question here. Is the government policy on forex retentions? Previously, the government policy is that previous to the government policy was that if you had incremental production, as we do, we've got incremental production. You know, we've increased production from, what? 57,000 ounces in 2020 to about 81,000 ounces last year. Under the rules that applied previously, that incremental production, if you were listed on the Victoria Falls Stock Exchange, you got 100% of the revenues arising on the incremental production, the US dollars, and the balance in local currency. On that basis, we went off and listed on the Victoria Falls Exchange. The rules have now changed.
Under the previous regime, our blended average, you know, split of currency, local currency to U.S. dollars, was about 72% in U.S. dollars and the balance in local currency. Under the regime that was announced a month or so ago in respect of existing operations, that's now moved to 75% in U.S. dollars and 25% in local currency. It has improved very slightly. It's also fair to say that we do not accumulate a pile of Zimbabwe dollars for which we've got no purpose. If anything, at any point in time, we are typically overdrawn in Zimbabwe dollars. Okay? That's the first question I'd like to address.
We believe that we have the change in the regulations which then effectively unwound that relaxation such that if you moved from the Zimbabwe Stock Exchange, which is a local currency denominated exchange, to the Vic Falls Exchange, which is a U.S. dollar exchange, people were doing that even though they're domestic companies with a view to trying to get increased revenues in U.S. dollars. Our understanding still is that for the Bilboes project, we will continue, we will get 100% of the revenues in U.S. dollars. Whilst the change in policy may have taken the shine a little bit off the Victoria Falls Exchange, we don't believe it affects our position going forward.
I can't comment on other people's aspirations and why other people might wanna list on the Victoria Falls Exchange. That's their business and not our business. What I'm saying is that insofar as it affects us, the policy change, as far as we, as far as we are aware, does not affect us. A question about to what extent, AR Main has been mined out. I understand this is a large ore body conducive to trackless mining. What is the predominant mining method going forward for the next couple of years? That's the question. Dana, could you answer that?
AR Main is basically mined out. There's low grade stuff there. AR Main won't extend, and it doesn't really feature in, you know, the future production. Yes, it was a large ore body, up to 30 m wide, and we use longwall stoping in our main body. Going forward as far as mining methods are concerned, it will stay a hybrid method. We sort of got a rule of thumb when stoping widths are below 4.5 m, we're doing underground stoping. If it's wider than that, we are looking at, you know, longwall stoping. It doesn't always mean it's suitable for longwall stoping. Generally between 4.5 m-6.5 m, we start changing over to longwall stoping.
It varies. AR itself is predominantly longwall stoping. Blanket ore body, it's a combination. Right in the middle where the juicy stuff is, that's longwall stoping. On the edges, it's underground stoping. Then you see similar sort of hybrid methods going to Eureka and Lima. Lima is predominantly underground stoping. Then, at Eureka, we also have some wider areas where we have a combination of longwall stoping and underground stoping.
A question as to why the forecast guidance range for Blanket lower than the 2020 achieved. The guidance range that we put out for Blanket in 2022 was 72-80. This year it's 75-80. Blanket is a steady state operation. We see little prospect to increase production above 80,000 ounces. It's a realistic assessment, is that Blanket should be able to do between 75 and 80. Whether it's the bottom end of that or the top end will just depend on the ordinary vagaries of mining as I'm sure the person who asked the question understands. Chester, there's a question about the increase in the overdraft or the overdraft. Do you wanna talk about the overdrafts in Zimbabwe?
Yeah. Sure. We wanted some debt funding in our business. We were conservatively geared or ungeared to a large extent. We were looking for some debt funding. Overdrafts were available in country. There's not a big market in Zim to obtain term loans and long-term debt. We utilized overdrafts to fund some short-term funding gaps at Blanket. It should be repaid by the last part of this year.
I think the other thing is dollar-denominated overdrafts in Zimbabwe have only relatively recently become available. Is that correct, Chester?
That's right. Dollar-denominated debt, that's few and far between. I think, you know, we were in a fortunate position to get it in country and, we utilized that to plug the short-term gap.
Yeah. The other thing to understand is that in the course of any month, our cash typically, it can be quite lumpy in, you know. The cash should hopefully build up over the course of the month as you get deliveries and you get paid for those deliveries. Then there's a big outflow at the end of the month as you pay your creditors and you pay your, you'll pay your workers. It is quite lumpy. It just helps to smooth our treasury and our cash management if we can, if we can, you know, extract cash by way of dividend payments and other payments. It just helps to smooth things out.
One of our other objectives, strategic objectives as to what I'll just use the phrase, make ourselves relevant in Zimbabwe. That part of that is, you know, having local shareholders through the Vic Falls Exchange listing and having meaningful relationships with banks in that, you know, we borrow money off them. So that everyone has got some sort of skin in the game and some participation in the future growth. The availability of debt funding in Zim is pretty limited and it's very short term. I don't see any further questions. Do we? We're just on the hour. That's not me. That's not me trying to cut this off at the hour.
Genuinely, I can see no further questions. Just give it a minute. Okay. If there are no further questions, thank you all for your participation. You know, it's the end of March, you'll be looking for Q1 results coming out in mid-May. I think to characterize the way we see 2023, after a fairly exciting time in 2022, we would hope to see 2023 as a period of stabilization and consolidation, which may sound quite boring, but actually is not a bad thing to do in this environment. With that, I thank you all very much for your attendance.