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Thank you for standing by, and welcome to the Resolute Mining Limited December 2022 Quarterly Results and 2023 Guidance Call. [Operator Instructions] I would now like to hand the conference over to Mr. Terry Holohan, Managing Director and CEO. Please go ahead.
Thanks, Rachel, and welcome, everybody, on the call. I'm pleased to be able to report today the quarterly activities for December '22. And I think if you've heard me before on these calls, there's no major surprises for me and everything went according to plan. I think it was a strong quarter for a good year, and we will highlight that a little bit more. What I plan to do is I'll take you through the highlights. I'll then go through very quickly the ESG, some production information, exploration, then I'll hand over to Doug. He will take you through the finance and corporate, and then I'll go through the 2023 guidance, and then we'll go for Q&A, and I'll do a final wrap at the end.
Go straight to the highlights. I think the TRIFR again, a record low for us as a company, 0.41, a significant step down. And as I reported last time, Syama going absolutely fantastic on safety at the moment. Within 8 days, they're going to be 4 years with -- without a lost time incident, which is an amazing record even where they stand at the moment. But I think the guys on there really focusing on safety, and the results speak for themselves there.
If we look at the quarterly production, record for the year 91,777. We did have a couple of hiccups right at the end. Otherwise, we would have gone over the 92,000. But we kept the advantage that we started off with -- in the first and second quarter, and it is now the fifth consecutive quarter of increased production. And that's what we're really excited for. And of course, we exceeded our guidance. We gave you 345,000 at $1,425. We went over that by about 8,000 ounces, but I'd say most of that was collected in the early part of the year when we did the shutdown and started cleaning the ponds. And then we were slightly over on costs at 5% up on all-in costs, and Doug will give you a little bit more color a bit later on that.
Sales. Good sales figures. If you remember, we've got a hedge book covering 30% of our metal going forward for the length of the loans as covenants on the loans, and we realized $1,817 per ounce on average for the quarter, which is about $89 up on the spot price.
And if you look at net debt, that beat our expectations by about $10 million. We finished off at net of $31.6 million. We're quite impressed with that. We think that's a good number and has put us squarely in the in the bracket, we think, with our peers. Finally, we've tied up our balance sheet there.
We also did a [ Canaccord ] and spot raise, very successful out there. It was oversubscribed and has quite a large take-up with the retail stock which was very good. And we've also brought in some long-term Tier 1 institutional investors who are very keen to assist us and focus with us on bringing this turnaround story to completion and really starting on a strong growth pattern over the next 2 and 3 years.
If you look at the capital and the monies that came in, we've now subsequent to the quarter, we managed to take our RCF down to 0, and that's sitting there with a turn through to Q1 '24 with monies available. So altogether, as we sit now today, we've got over $200 million available as available liquidity.
We also got the final tranche of the Bibiani sale that came in. And in terms of ESG, we did our certification, which I mentioned we were hoping to achieve in that quarter. We got it. We're really proud of that, and that's really a landmark for the operations, given that those audits were conducted on site.
In terms of our guidance to '23, we're looking at a very similar year. We're looking at about 350,000 ounces, all in slightly lower at $1,480. But I think -- and that is what I classify as a base case without the initiatives we've got in line and without anything coming in from Syama North because I think there could be a strong possibility of bringing some of the cheaper ounces in from Syama North some stage during the year, but that will come about or at least the information will come through at the end of this quarter, and I will be announcing this early in quarter 2 as part of the feasibility study results.
And then, of course, the big news that we put out the other week. The mineral resource that has surprised us. It surprised our exploration guys. 34 million tonnes, an extra 14 million tonnes added to that previous mineral resource. That takes us to 3.81 -- sorry, 3.18 million ounces of gold at a grade of 2.9. And more importantly, 1.86 million of that, as we sit now, is in measured and indicated. And we did also confirm that a large block in A21 that we got a hint of in the previous quarter, we've actually confirmed that with drill holes around that. So as a result of that large block, we are going deeper this year. We have not yet finished the lines all the way 150 meters deep, but we will be going back, especially on that large block area to 200 meters.
So I think all in all, it's a very busy and a very exciting quarter for us. As far as we can say, we just ticked all the boxes that we'd actually set out over the last 18 months.
So if I go into the operations overview. First of all, I think the couple of numbers, I'd like to highlight the ore mined. We're mining there for the quarter at 1.8. That's 7 million tonnes per annum equivalent. That's the sort of numbers that we feel we can squeeze out of the mining operation now. And I'll go into it a bit later with good grades.
And then on the processing side, 1.5, that's annualized 6. If you remember, we -- previous year, we did 5.6 million tonnes. We're sort of squeezing that up a little bit each month. We're debottlenecking the Syama oxide plant, we're debottlenecking still the Mako plant, and we're expanding those tonnes slowly but surely.
And also, what is quite encouraging is that even though we're pushing tonnes a little bit higher, and the grades are roughly about the same, we're getting slightly higher recoveries because of the focus with our metals in the plant.
So if we go to ESG very briefly. Just to mention, yes, we did the ISO ticking the boxes. The 2 ISO certifications that we got last year. And I just want to remind you that we did say by June this year, we will get to the World Gold Council's Responsible Gold Mining Principles at 100%. We're tracking at 88%. We're ahead of the curve, and we feel comfortable we're going to get 100% by mid-2023.
Going to the operations, talk about Syama first, the sulfide operation. I think the key highlights there is if you look at -- I've been talking about grade of the underground mine for the last 6 calls. When we started out there, we are sub 2.4 gram a tonne. It systematically came up, and remember I was very excited in the September quarter recording at 2.71. And I said to you once we've got that grade, which at 2.71 is that grade I was looking for, then we'll start pushing tonnes. And I'm really pleased to see that we pushed an extra over 100,000 tonnes out of the mine, and we maintained that grade at 2.74.
So that mine, we've got it presently operating up to about 2.66 million tonnes per annum, which is more than what we were looking for, for this year. We're thinking the plant is going to [ treat ] about 2.35, but we've got that ability, that flexibility underground in the operation at the grade. And that's what we've been working on for the last 18 months.
Also, very importantly, is our reconciliations. They were quite wild originally when we're at the 2.4 grams a tonne. But at 2.74, we're about 4% within on reconciliation, which is where everybody wants to be usually, less than 5%.
And if we look at the processing side, also a good month on tonnage, equivalent of about 2.2 million tonnes per annum. I'd say we're looking at 2.35. We're still deep bottlenecking in the sulfide circuit. We're working on the crushers as we speak now and with a view to start stepping that up and then we're also working on the mills. But again, with the grade because we've got the extra tonnage, we could select out the better grade materials, and we actually have 2.83 gram a tonne going through the processing plant. And these grades have never been seen from underground before in either the ore or in the plant.
In terms of costs, Doug will go into a little bit more costs on the sulfides coming down slightly, even though we did a lot more mining underground. We're starting to see our initiatives kick in there, and we expect that trend to continue going forward.
So I think the other thing I mentioned, we've completely overhauled all our trucks now since we took over a year ago from Byrnecut, and they're all refurbished and we're starting to see productivity improvements. And as I mentioned, we really wanted to get the grade of the operation from underground over to 2.6 gram a tonne. But at the moment, we're tracking about 2.7 gram a tonne. So there's lots of good news there.
If you look at the oxide, the whole year, I've been saying the grades were going to come up. They did come up to 1.55 from the mining operation, a lot of it towards year-end. A little bit later than I expected, but that trend is still continuing as we speak now in this quarter. And what I'm really pleased to see is that, that circuit now contributed against 17,000 ounces, which is where we started the year and what we are expecting to get to. So we got there. Recoveries were maintained a little bit off, but we're focusing on those. And the important thing is that we are now 6 months ahead on the grade control right across all the satellite pits. If you remember, we had virtually no grade control in front of the operation about 9 months ago. And we invested a lot of money and time in that in the first half of the year, and that has given us a huge amount of confidence now with our predictions for this next year.
In terms of Mako, good tonnages there. We've got a new excavator. We've renewed the contract. If you remember, new excavator on site, we did to do -- we managed to do quite a large tonnage on 81,000 tonnes. And we pushed through the highest amount yet, although it's a slightly lower grade of 544,000 ounces, and that grade at 1.91 is the sort of numbers we're expecting to go forward with essentially because that is the grade of the material that we're hitting this next year. There's not much flexibility in this pit, and it's a closed system. But also very encouragingly is the 92.3% recovery even though that grade did come off a little bit.
I think the other important thing on Mali -- sorry, on Mako is that with all that work on the mill slicer which has given us the extra tonnes and is making sure the rock is not hitting the liners of the mill. We actually managed to get away with only 3 side linings for the year. If you remember, traditionally, we've done 4. We've just done a reline now as we speak in January. But going forward, we've reduced the downtime by 1 side reline, which is about 4 or 5 days shut that we normally have to do. So now we've gone to 3 side lines per year going forward. So that's a significant improvement.
A look at the exploration, Well, I did report -- we did report about this a couple of weeks ago. Very exciting. This story is going on and on. It's 6 kilometers of contiguous material. I think the big surprise to everybody is that while geologists have been on the ground for nearly 40 years on the Syama project, this area, this 85 kilometers, is greatly unexplored. This material is close to the mine, and we think there's a lot more material to be discovered.
As I mentioned earlier, we are continuing, and the uptick in the mineral reserve is essentially more tonnes at the same sort of grades. What we've managed to keep is the measure and indicated that 1.86 million ounces over 3 grams a tonne, but we did find a lot of -- on average 2.8, and that's gone into inferred. So that's brought the grade down a little bit. But we are focusing now, putting our ore reserve numbers together, which should be out by middle of February on that larger area, which we know is going to be [ over fittable ] and probably going to give us lower strip ratios than we originally thought. I don't want to talk too much about the numbers on that yet. The feasibility study will be out towards the end of the quarter, and we'll be reporting on that earlier in Q2.
Just as a quick note on the 3.2 million ounce, about 8% is oxide. It's not whole 1 complete contiguous block. It is blocking a little bit. A lot of work is going into that. So how much we're going to turn to ore reserve, we'll only find out in middle of February. I'm not able to sort of give any indications at this point in time.
So with that, that's the operations, ESG and the exploration. I'll hand over to Doug just to take us through the financing and corporate issues. And then I'll come back with the '23 guidance.
Yes. Thanks, Terry. As usual, I plan just to add a bit more color on the costs and then step you through the cash flow, net debt and the hedge book, and Terry will wind up with the guidance as we said.
So just on December quarter, unit cash costs of $1,473 an ounce were 6% higher than the September quarter. This is largely due to a 19% increase in overburden removes at the oxide operations at Syama to access the high-grade material at Tabakoroni. In addition, we had a 25% increase in ore mined from underground as the ROM pad stocks were rebuilt following the wet season. So you'll note there, I think we've rebuilt stocks by about 100,000 tonnes in the quarter. In addition, we had a 45% increase in underground development meters, which largely reflects a degree of catch-up during the quarter where we did 13 -- a bit over 1,300 meters compared to Q3, where we did just over 900 meters.
We continue to feel pressure on our input costs like others in the industry. Just to give you a bit of flavor of that, Syama diesel prices averaged USD 1.35 during the quarter. And that was the same number for the half for the second half. And that has -- that represents a significant increase on quarter 1 before the conflict broke out in the Ukraine, where we averaged $0.76.
HFO prices for the power plant at Syama remained around $0.90 a liter for the quarter and a comparison to Q1 where it was $0.72. Mako costs were also up. And perhaps 1 item of note in more of a second half story than just necessarily the December quarter, although we did see a slight uptick in November pricing, is around our ammonium nitrate, which has almost doubled through the course of the 2022 to just over $2,000 a tonne. So that's a significant uplift for us, represents an increase in -- on a monthly basis of about $600,000 or $700,000 against where we started the year.
December all-in sustaining costs of $1,547 was up 2% on the September quarter for the -- largely the same reasons as the cash costs were which -- but there was a small offset in relation to noncash charges in the December quarter in relation to a reduction of the GIC charge as we pulled less ounces through the circuit in Q4 than we did in Q3.
Group all-in sustaining costs for the year were $1,498. As Terry mentioned, about 5% up on the guided number of $1,425 million which included a noncash expense of $44 an ounce, which is largely attributable to the GIC drawdown.
Turning to the cash flow for the quarter. The big ticket items, obviously, the equity raise and the asset sale proceeds contributed to the significant repayment of debt that Terry has already mentioned there. And after accounting for -- sorry, before asset sales, debt service and government dividends, the business generated about $8 million in free cash flow in the quarter, and that was after choosing to spend $4 million on exploration.
Net debt, as Terry has mentioned, largely thanks to the equity raise and the Bibiani proceeds and free cash flow, has reduced by a little under $125 million in the quarter to $31.6 million at year-end.
And then finally, just an update on the hedge book. The requirement to hedge is still there, while ever those banking facilities are in place. But in the Q4, as Terry has mentioned, we were quite thankful for the hedge book as we achieved a gold price significantly above the spot, courtesy of the hedge book. But at 31 December, we had a total of 172,500 ounces hedged at an average price of $1,886 an ounce.
And with that, I'll hand back to Terry to cover off on 2023 guidance. Thanks, Terry.
Thanks, Doug. Thanks very much. So we're seeing a similar year, 350,000 ounces at about $1,480. And I'd say this is really a base case for us. We are actually targeting a little bit better. The Syama circuit, we think 160,000 ounces. You might think that's a bit low. We did 161,000 this year. But remember, we had 20,000 ounces coming out of GIC on the Syama circuit. A lot of it from gold in circuit, concentrates, et cetera, they've built up over the years. And we have quite a big cleanout of the refractory itself, which was carrying quite a lot of gold between the bricks. Remember, we replaced it with a with a spray-on refractory, so we shouldn't have that issue again.
Syama oxide, now we've got far more confidence. I remember, I mentioned we've got 8 months grade control now. We didn't have a lot of grade control in the previous budget. So we lost out on grade a little bit this year -- sorry, last year, with 62,000 ounces. We're seeing 73,000 now coming forward this year.
And then Mako, as I mentioned, we're going through a low-grade patch this next year. I'll talk about a little bit more of what we're seeing about 117,000 there. So what we're saying is that with the 350,000 similar targets to this year, we're losing some on Mako, but we're gaining some on Syama oxides essentially.
If you look at -- just a note on the, Syama sulfide with the underground operation. We have, as mentioned, we've gone ahead slightly now with a bit more development, spent a bit more money there, but we're over 12 months in terms of development there. So we've got all the next levels ready to go.
As I mentioned, sulfides, essentially, that is a function of tonnes and grade now. We've got both which we're excited about and essentially trying to debottleneck that plant, and that is ongoing now. We are looking at tertiary crushers on the Syama sulfide circuit. We're working on it as we speak. So we should see some benefits fairly soon, getting slightly higher tonnes through there.
In terms of coal in circuits in the ponds, we're now not dealing with some of the concentrates which we stocked up. We do have some residues, but it will be a small contribution this year. So it's all really coming from the underground, the tonnes on the grade.
Oxide, as I mentioned, great control gives us a lot more confidence in our numbers compared to last year. And -- but we haven't actually -- sorry, that's benefiting from that extensive grade control that we did in '22.
And as I mentioned previously, we've got the PFS underway. We're starting to hear the numbers now, looking at numbers. That increased MRE, mineral resource estimate, that came out has made us just go back to it a bit more and think about how best to do that, but we're on track to get that out, at least in draft form in Q1. We will actually be able to publish that in Q2 shortly. But we haven't allowed for any material from that Syama North into our guidance numbers for next year -- sorry, this year.
As I mentioned, Mako, 117,000 ounces. This compares to the 129,000 we've just done and a slightly higher cost. It's really a grade issue there. We are going through a low-grade area. And -- but there are some advantage on that later on. It will give us the opportunity to do some in-pit waste dumping later because we've got another 2 years left after this year on that pit. And it also means we'll be able to get a little -- a few more ounces out and at far better cost going down the track.
So if you look at the table, we put that [ '24 ], we think we're going to be 135,000 to 145,000 ounces in '24, same again in '25, but you can see the costs are coming down quite drastically after this year. Costs will be pretty high, the peak cost for this year because of that grade. But the grade will be coming up again in the following 2 years.
I think that is probably about -- I'm just looking at my notes. Obviously, the exploration, we're pushing really hard on Syama North, and we're also pushing hard at Mako because we're still confident that we can find something to keep that plant going in 3 years' time when we start running out of underground material -- sorry, open pit material and have to start looking at our stocks -- low-grade stocks on service. So we're still focusing to try and find something there. So we're still looking at a similar sort of budget, $16 million for 2023 to be spent on exploration.
Capital expenditure sustaining forecast to be $34 million and non-sustaining about $54 million. Those numbers there. They can pay -- you've got the information in the note here to compare to what we've done this year or this last year.
Okay. So with that, I'll hand it over to Q&A. Thanks, Rachel.
[Operator Instructions] Your first question comes from Reg Spencer from Canaccord.
Terry, congratulations to you and the team on another very good quarter. So it's great to see [indiscernible] starting to sing. My first question relates to your all-in sustaining costs. '23 guidance is lower than what you reported in the December quarter. Can I ask whether that signals that you expect some inflationary pressures to abate? Or is that lower cost versus the December quarter more a function of operating efficiencies that you expect to -- you expect to benefit from next year -- or this year, I should say?
Thanks, Rich. Yes, it's all about operational efficiencies. We've been talking about this for 3 quarters now, and we're just starting to see the fact that we've refurbished all our vehicles. We've got vehicles on standby. We're actually filling the vehicles now instead of filling 3 quarters, and we've got a couple of [ Epiroc ] underground trucks on lease hire. So we'll have a couple of extra trucks again able to take 65 tonnes instead of the 58. So it's all about productivity, essentially. That's what -- and I'll say it's not a new topic. It's initiatives that we've been talking and working on for the last 9 months. But we're just starting to see them come into place now.
Understood. And when we look at your unit cost drivers, then I think I've mentioned -- and yourself in your commentary mentioned that you are still seeing some of those pressures. Are there any signals that they may be abating? We are seeing some commentary out of some of the West Australian-focused gold producers that they are starting to see some pressure [ follow ]. What is the situation in [ Africa ] in terms of that operating environment?
We're not seeing it yet, Rich. Essentially, as Doug was saying, the diesel prices haven't come off yet in Mali. And the other thing is the diesel cost in Mako in Senegal have actually risen. They were subsidized quite heavily by the government for quite a long time, and they've taken that subsidized of subsidy -- sorry, of that as the 1st of January or 2nd of January this year. So we're seeing slight cost increases there. So we still think those cost pressures are with us, and we factored them in like that. So we've -- we're really focusing hard on cost containment. Looking at our overheads, see if we can reduce those and productivities at the operations. That's really our big driver this year.
Great. I had a couple of questions here on Syama North. Now I presume you're going to ask me to wait until you bring that study in a few weeks, but perhaps I'll [indiscernible] then.
Next question I had was the growth capital and nonsustaining capital at Mako. The $25 million that you're guiding for next year for stripping costs are a bit of a surprise to me. Are there any other major nonsustaining CapEx items that we can expect across Syama and [ tab ] on a 3- or 4-year view than what you've played to the market previously?
No, Syama is fairly static. I think with the pre-feasibility coming out, that's -- we're going to be relooking at that because as I've always mentioned, we're looking at small capital improvements to the operations spread over sort of 18 months to just systematically improve the operation. So Syama, I don't think there's any surprises. We've also filled our tailings dam, but we've left 6 months on top there. Just in case we have problems for some reason, we're pumping our fit. But the in-pit tailings has been going well for the last 2 months. So we don't see any issues there.
I think the Mako issue is all about -- if you remember, the original Mako mine was designed at $1,250, and then we upped it to a $1,500 pit, and we redid all the numbers back in 2019 and expanded it. And the issue really now is that what then was a $1,500 pit is now a $1,750 pit with the cost increases. It's quite a step-up in cost. I mean, we mentioned this. The ammonia costs, which are affecting the explosives, et cetera, those costs have doubled in the last couple of quarters. And that is really because of things like the fertilizers, et cetera, was originally coming from Russia. They're just not coming for any more. So we've had to go source elsewhere and it's very expensive.
Okay. Understood. Last one, you may not be expecting this question, but I'm going to ask it anyway. Ravenswood, from memory, there were some promissory notes and some gold price contingent consideration attached to that sale work a couple of years ago. And again, some of that consideration payable to Resolute was on an IPO or an exit by the acquirers of the asset. Have you got any update as to where that might stand? With the Australian dollar gold at very high levels, I just thought that might be another little bit of potential balance sheet improvement that could potentially come into Resolute over the next little while.
Yes, you're right. They still stand. There's 2 tickets there, 1 coming in from '24, 1 in '27. We haven't really focused on them before because our debt which was very [ onus ] this last year just finally closes off in Q1 '24. So we haven't included it to sort of make sure people didn't confuse it and think that, that was another credit that was going to come in before the debt came up. But we will start talking about that. They are in place. And I'll just ask Doug to remind us what the numbers are. And Doug and James are there together, they'll be able to remind us what the numbers are.
Yes. Thanks, Terry. There's also the liquidity event potential upside of up to 150 million, I think, also just highlighting. No real update on that other than, I guess, it's owned by private equity, and they'll be looking for an exit at some stage.
The 2 amounts that Terry is referring to, the AUD 50 million is contingent on gold price -- Aussie gold price, which we pretty much ticked that box. The one outstanding is the 500,000 ounces before March 2024. There is a 3-month grace period, which gets you to June '24, or allows the operation to get to that 500,000 ounces of production post acquisition by June '24, but you do need both. I stress you do need both the Aussie gold price contingent component, which gold price would have to absolutely collapse for that to not be hit. And I think that's almost impossible now. But the 500,000 ounces of production is -- well, I'd say it's probably 50-50 at this point. We're still hopeful that it will be achieved. But there's a way to go yet. And then the promissory note is the 2027 amount which accrues interest at 6% is capitalized to that note and then payable either on a liquidity event or in 2027.
I'll pass it on. Congrats again on a good quarter.
Thanks, Reg.
The next question comes from Jon Ogden from Eastern Value.
The presentation. A couple of questions, very simple to ask is if you can give us any update on the security situation in Mali. Just we've had [ 2 ] there in Burkina, and Wagner Group is evidently in the news as well. They even told that they were given gold production in Burkina. So any thoughts on any deterioration in the security situation or the kind of regulatory situation? I mean, I guess, Mako is probably fine. We don't need to worry about that.
And then the second one is, you've done a fantastic job improving operations. But just focusing now on actual cash generated, it seems that you're still kind of just breakeven. I mean, is that how we should think of the operation at the moment with go where it is and the operations where they are? So in other words, to generate cash at this -- with the present gold price, you need further improvements in getting costs down.
I'll say this because it seems like you're generating USD 25 million a quarter around. However, the add-ons just sort of eat up most of that. And that's including, obviously, exploration, which you obviously need to do, not really optional $10 million in CapEx, which is kind of maintenance CapEx.
And then the other thing is you've got working capital, which always seems negative. So I just wonder if you can explain what that is. I would expect it to go up when you obviously seen diesel going out, so that's going to draw in working capital. But expect that to plateau off, but that's not the case. So it seems that like the last 7, 8 quarters, I think there's been 60-something million or more of working capital drawn in by the business. So maybe you could comment on that. And then the other add-ons like VAT, government dividend, withholding tax and so on. Just so we can get an idea of when we actually can generate cash in sort of absolute terms.
Good. Thanks, Jon. I think, first of all, I'll ask Doug to give a bit of help when we go to the cash side of it, but I can talk to it initially in a moment. But let's talk about the security situation. Obviously, we're very close to that. We've got very, very close contacts on the ground with our -- the families of our employees, 1,000 people, and then the 23 villages in our region with all the regional people and then obviously in Bamako with the -- we've got an open door with the Minister of Mines, et cetera.
So we certainly keep our finger on the pulse there. We don't see any deterioration on security in terms of the operation. It's always been very quiet in the Southeast corner there of Mali. Remember, Mali is twice the size of Texas. It's a big country. A lot of it's always happened in Timbuktu, the Sajal area. And with the [ Borgata ] Group coming in, the fact is that they've managed to chase the majority of the [indiscernible] over to Burkina Faso and that's where all the troubles are now.
Yes, there has been discussions about the Wagner Group and mostly mentioned by the [ Bogle ] group themselves that they're going to get paid in gold mines. Well, that's not fact. It's never been tabled at the parliament, have never been talked by the cabinet. They just smile and laugh about that. So we don't see any change to the security situation.
I don't drive there, but from Bamako to the operation much these days, but we've never had to pull in our geology side of the field as such. But we've got great intel out there, and we've had recently had visits -- high-level visits going out to see the mine on a regular occasion. We've got another one coming up, and we're comfortable with that where it is at the moment.
We've got insurance auditors on site as we speak at the moment. So we're monitoring extremely carefully. We always have been and we've been on that -- in the country over 4 Qs, and we've never really seen any change. So we see -- I wouldn't say normal, but no change essentially in the situation.
In terms of the operations and cash generation, we think there is space really to focus on our productivities now and improve all our productivities on the mining. It is, to a large extent, a unit operation. We need to get more units out of there. We know that on the margin coming from the underground, our gold is producing that at close to $1,000 an ounce, but we've got quite a lot of overheads there. So systematically, if we can, over the next 2 years, improve the operation at Syama from say, 225,000 ounces up to 280,000, maybe 300,000 ounces, the cost -- the all-in costs are going to come down systematically on that.
Exploration, yes, we're spending quite a bit of money on that at the moment. We're putting about $10 million into Syama because we certainly think that, that -- I mean, we've got 20 million tonnes of -- 22 million tonnes of underground material as ore reserve. And now we've suddenly got this Syama North material, which is a similar type material. It's on surface. It's got relative -- it's medium strip ratios. It's softer than the underground, and it's got slightly higher recovery. So I think the prefeasibility study is going to say, well, don't push your mine underground too hard, leave it where it is now, but it's starting to hum. And all the expansions you should fix through the sulfide -- sorry, the Syama North. So I think that's going to give us a huge amount of flexibility and some knock-on reductions in costs.
And then yes, working capital. We've been through a few scares there, specifically at Syama. We thought we were going to go into Eco sanctions again on the 1st of January because of that group so-called mercenaries that were being held in Mali, and 46 people it was, I think, from memory. But they were released and that went by, but we managed to stock up. Because every time something like that happens, the maintenance guys get a bit excited. But essentially, we've -- there's some other payments that we've made that Doug can go into. But I would suggest that working cap that's really topped out now and we should start seeing reductions in that now going forward.
We have a lot of materials in stores. And I mean just to give you an example, we're refurbishing new count crushers on the tertiary circuits on the sulfide circuit, and most of those spares are actually coming out of the stores. We didn't have to buy the stuff. We've got a lot of equipment in stores at the moment. So there's a bit of rationalization needs to be done there, and I think you will see the benefits on that. I think maybe, Doug, you could just put a little bit more color on the VAT dividends and withholding tax and stuff. And maybe just a little bit more color on the working cap.
Yes. Thanks, Terry. Yes. Look, on the working cap, I think you've covered most of it really. But what I would say, when the balance sheet comes out in late February, you'll see that creditors have come down over the year. They started the year at just under $92 million at the end of last year, and that number will be under $70 million. So that's been a draw on cash. That's, we think, a more normal level of creditors. Obviously, we're not -- we don't want to be too good a payer of our suppliers. But I think where we were as a business this time last year, that credit number was well north of 2 months of supply or cash costs. So we've brought that down into a more reasonable space. And as Terry mentioned, with all the things that have gone on in Mali over the course of this year, ECOWAS sanctions at the beginning of the year, which were lifted in July and then the threat of ECOWAS sanctions being brought towards the end of last year around those Cote d'Ivoire prisoners that were released. We obviously want to be quite cautious in our stock levels and make sure that we have sufficient stocks and consumables to combat anything that might come our way in terms of additional sanctions. So that's seen an uplift.
And obviously, if you get a 70% or 80% increase in fuel costs, diesel costs through the year, just holding the same amount of fuel on site is going to cost you a lot more. So that's a draw on cash. And then the consumables I've talked about that we have to hold outside of fuel have also increased substantially 25% to 30%. And in the case of things like ammonium nitrate doubling. So price increases holding a bit more volume on store stock and a paydown of creditors through the year have all contributed to the number that you quite rightly talked about over the last 12 months. That has been a draw on cash going forward. And I know I've said this before, but we've continued to have some of these issues, we would see that stabilizing, and wouldn't expect that to be a significant draw on cash going into next year -- or into this year, I should say. What was the other thing that you wanted me to cover Terry, sorry? VAT.
Yes. So we continue VAT in Mali. So we continue to, I guess, to have discussions with government about the refund of VAT. It's no secret that we don't have our VAT refunded in Mali. It's a significant drain, as you can see from that cash flow waterfall chart. And so that's a key focus area to have that resolved.
A number of claims have been brought against Resolute that have offset against that VAT receivable. You can see in our 30 June and also 31 December last year balance sheet. But that is a matter that continues to be under negotiation, I should say.
But the government dividend is the 10% dividend that we pay to the [ Senegal ] East government in relation to Mako. That's not all paid in 1 hit. That dribbles out over the course of the year. So that's the major component there. And you should see the interest bill obviously come down, whilst the interest rates have gone up substantially. We've obviously brought the debt down by more than that. So we would expect that to come down going forward.
If you don't mind, just a couple of other questions. Sorry, I'm a bit sort of new on to the VAT. I mean, can you just give us a bit more detail on that in terms of what's the percent and where is your money coming out and should be coming back. It isn't. I mean, if you can just explain the whole situation. And then just give us some idea of how much is going out over the year and if that's going to continue into 2023. So at the moment, it's sort of de facto cash outflow, which should be happening where it is just so I can sort of quantify that?
And secondly, if -- 2023 -- sorry, I missed the CapEx there. I mean, so this year should be fairly minimal CapEx? I mean just Syama North, if that happens, it's just [ prestrip ] basically and no need to rejig the mill. So it's basically just the pre strip cost to get going on Syama North, is that right?
And then Mako is pretty good, so we should just be fairly minimal in CapEx? And what's the next potential big chunk of CapEx? And when would that be, if you can -- so those are just a couple of other ones. If you can address them, that would be great.
Doug, you want to take this one?
Yes. Sure, Terry, I don't know if you want to comment on future capital. But the capital guide in there is $34 million of sustaining capital and a further $54 million of nonsustaining, which includes the $25 million of Mako stripping costs, which have longer-term benefits, hence it's in nonsustaining. So that's for this coming year. A lot of that is stripping costs. As you point out, there's no -- apart from sort of maintenance CapEx, replacement of light vehicles and the like, there's not any significant items in there that make that up. Although we do have the cost of the acquisition of the Mako power plant that's included in that nonsustaining, that's also mentioned in the commentary on Page 10.
In terms of the VAT, the Governor Mali doesn't refund our VAT. They should do under the legislation, but essentially where the company -- the country's finances are, they don't refund, as far as we're aware, any of the gold producers VAT. And we offset other taxes and royalties against that VAT balance. But the net cash outflow depends on the cash and the capital -- sorry, the OpEx and the CapEx spend during the year, but you can sort of broadly think about it as about $30 million a year, give or take, depending on the spend levels. So well over -- well, that's $2.5 million -- $2 million to $2.5 million a month type numbers depending on the spend rates. So we don't -- it's not a situation where we're happy with, and we have an agreement with the Malian government that's been talked about in the past that we are trying to get executed so that the VAT would be alleviated, but at the moment, not refunded. And that is a draw on our cash, no doubt.
Sorry, is that -- so that $30 million roughly is the net after you've offset some other taxes? So you end up with net...
Yes. Correct.
Okay. I'm sorry, what's the percent on what sort of items does that kind of cover, in fact, where does that come into it?
Yes, it's 18%, and it's similar to the GST that we're used to, or VAT in the U.K., it's on goods and services.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Holohan for closing remarks.
Good. Thanks, Rachel. So I think in summary, we think it's another good quarter, #5, and we think it's a good year. I think we've turned the corner. We've made a nominal profit on Syama. We obviously expect to grow on that and focus on the issues that we've discussed this evening. And we think that's a perfect foundation for organic growth at Syama because we've ticked all the boxes we talked about over the last 18 months. I think the -- if you look at where we're going forward now, we think the tonnages are up. The grades are up. Exploration is humming, and we expect now this year to focus on unit cost coming down. And that's really the major focus of this year. And then obviously, the PFS is going to be coming out in Q1. That will talk about enhancement opportunities, and that will be a project that we'll look at. Low capital. We've always said it would be less than $50 million, but the IRRs should be quite significant given that we've got the Syama North right on top of the mine, right on top of the processing plant.
Good. Thank you very much, everybody, and have a good day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.