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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon, everybody, and for those joining us from North America, good morning, and welcome to AngloGold Ashanti's Full Year Results for 2020. We have a busy lineup today with various members of our executive team talking us through the results.
Before we get there, I would like to direct you to the Safe Harbor statement in the presentation. It has important information regarding forward-looking statements that may be made during this conference call. It's important information, and I do urge you to read it.
Without further ado, I'm going to hand over to Christine to talk us through an overview.
Thanks, Stewart. As always, we'll start with a look at our safety performance. As we previously reported, we had 6 fatalities, all in the year through to July, with 4 at our South Africa operations, which have now been sold and 2 in Ghana at Obuasi. Our efforts are aimed squarely at eliminating all injuries and especially fatal accidents from our operations. This year, we'll be implementing an updated safety strategy across our business, with particular focus on the critical controls needed to eliminate what we call high-consequence, low-frequency events.
We continue to invest considerable resources in understanding the root causes of all accidents and also high-potential incidents or near misses in order to prevent recurrences. Aside from those leading indicators of accidents, there's also value in looking at lagging indicators like the all injury frequency rate, which ended last year at its lowest level ever, 2.39 injuries per million hours worked. That fell to 1.68 for our existing portfolio of assets without the South African assets included. That's well below the ICMM member average. It's also a strong indicator of the strength of our safety culture and the effectiveness of our systems and provides us a good foundation from which to continue working to realize our ultimate goal of zero harm.
A quick look at COVID-19, and our emphasis remains on safely ensuring business continuity as we navigate through the pandemic. We continue to work hand in glove with authorities and local communities in each of our operating jurisdictions, providing not only healthcare support where needed, but also assistance in other areas that are feeling considerable strain from the pandemic. This year, we'll likely require support in the vaccination drive across our sites, and we're looking at several ways in which we can aid government's efforts to safely and effectively roll out vaccines to our employees, their families and our host communities. Still, we saw an impact on the business from a production and cost perspective, which Ian will talk to in a moment, and with respect to considerable complexity in moving people around to our sites. We continue to rely on strict adherence to our COVID-19 protocols as the best way for our employees to stay safe.
As we look at 2020 from a strategic perspective, we had a strong year. In summary, we met guidance for the eighth consecutive year, showing constancy and reliability. We streamlined the portfolio by exiting operations in Mali and South Africa to focus on higher-return, longer-life opportunities. We progressed the construction of Obuasi Phase 2 to 90% at the end of last year and advanced our greenfield projects in Colombia. We vastly improved returns to shareholders and extended the average reserve life of our portfolio. Let's look at some of those highlights in more detail.
The financial performance of the business was especially strong, highlighting our full exposure to a buoyant gold price. Margins were up strongly, and we produced a little over 3 million ounces. We generated $1 billion in headline earnings, around 3 times the level last year. Free cash flow before growth CapEx, the measure on which we calculate dividends, also came in at just over $1 billion. To be clear, that would have been considerably higher if not for the cash lockup challenges we faced in the DRC and the Tanzanian VAT receivable. We'll talk to those more shortly.
We've declared a dividend more than 5 times higher than last year's payout at around $200 million in total. That was helped by the stronger cash flow and a more competitive dividend policy. We've achieved those returns and kept all our projects funded and on track without any equity funding top up. That's the tenth year in a row we've kept that record and it's one we plan to maintain with a balance sheet that continues to go from strength to strength.
Net debt dropped to its lowest level in a decade. Leverage ended the year close to zero and well below our target of 1 time through the cycle. And of course, the investment in reserve conversion and life extension got off to a very strong start.
Ore reserves grew by 6.1 million ounces on a gross basis, which more than offset our depletion and extended the reserve life of the portfolio to 11 years. We are tracking close to the target of Obuasi Phase 2 construction at the end of this quarter. And while still targeting ramp up to 4,000 tonnes a day in quarter 2, the impact of the pandemic may cause the tight schedule to overflow into quarter 3, and Graham will elaborate on Obuasi a little later.
I won't spend a lot of time here, but we have maintained a good margin whilst self-funding our business through years of a difficult market. We've seen that margin step-up to around 40% this past year as we've remained disciplined and seen the gold price move higher. We've always said that shareholders must get their first slice of the pie before investment in growth. I'm pleased to say that they will receive a much bigger slice from our 2020 activities. This slice is also bigger than the one going to service our balance sheet, the first time in many years that this is the case. It's also important to note, though, that this more generous payout does not, in any way, change our firm commitment to continue self-funding all our reinvestment needs and the greenfield projects that are moving toward an investment decision.
So in summary, we continue to follow a very clear strategy. It's about being prudent and disciplined, in line with our commitment to remain a self-funding gold producer, which benefits a range of stakeholders and drives improving shareholder returns over the long-term. To that end, we continue to upgrade the overall quality of the portfolio through several means: selling short-life, higher-cost assets; bringing in new, lower-cost and longer-life ounces, first from Obuasi, and then from Gramalote and Quebradona. And we are continuing to add new ounces at a hugely competitive cost at our existing sites. Importantly, we are adding these ounces on a per share basis, which sets us apart.
We're strengthening the balance sheet. At almost $3 billion, liquidity is strong and getting stronger. Leverage is low and trending lower, and we've replaced maturing bonds with lower-cost, long-term debt. We're working to improve direct returns to shareholders over the long term, and that means keeping an eye on costs and reinvesting in the business. We believe this reinvestment should be funded wherever possible without diluting shareholders, and we've walked the talk on that point for 10 years now. In fact, capital discipline is very much in the DNA of the company and so is the focus on sustainability as we do work on a broad front to improve our social license to operate.
And with that, I'll hand over to Ian to talk to the financials.
Thanks, Christine, and good day, everyone. As you've heard from Christine, we have delivered a solid operational and financial performance for the year with our key metrics reflecting continued focus on operational efficiencies and capital discipline. This is the last period for which we will report results inclusive of the South African assets as the sale to Harmony successfully concluded at the end of the third quarter of 2020. Harmony took control of these assets effective October 1, 2020. Despite the accounting treatment of these assets as discontinued operations, I will discuss the performance of the Group as a whole to particularly make the operational comparisons easier. Our detailed results announcement contains sufficient information of continuing and discontinued operations separately, and I would refer you to that further information.
Production of 3.047 million ounces for the year includes South African production of 241,000 ounces for the 9 months through to September. In terms of the continuing business, production for the year was 2% or 56,000 ounces lower. The sale of the Sadiola and Morila operations concluded on 30 December and 11 November, respectively, and this further assisted us with the streamlining of our portfolio. Performance for the year was underpinned by a record year at Geita of 623,000 ounces, which is its highest level of production since AngloGold Ashanti took full ownership of that operation. Geita has now surpassed 10 million ounces produced since it has commenced production in the late 1990s. Geita was supported by steady performances at Kibali, Iduapriem, Siguiri, Sunrise Dam and AGA Mineração, which offset reductions at Tropicana, Cerro Vanguardia and Serra Grande. Obuasi continued to ramp up and produce 127,000 ounces during the year despite COVID-19 challenges. Commercial production was achieved for Phase 1 of the redevelopment project at the beginning of the fourth quarter of 2020.
Adjusted EBITDA increased 50% year-on-year to $2.593 billion from $1.723 billion on the back of a 27% increase in the gold price received for the year. Total capital expenditure at $792 million is 3% lower year-on-year with sustaining capital at $532 million, 8% higher than the prior year, reflective of the additional spend on ore reserve development, exploration and deferred stripping in terms of our reinvestment strategy to create improved mining flexibility and ore body confidence. Growth capital of $260 million was 19% lower than 2019 with the Obuasi project having passed the peak expenditure phase as well as an element of growth capital rollover into 2021. This is due to challenges experienced as a result of COVID-19 impacts relating to specialist skill shortages and ongoing travel restrictions.
Free cash flow for the year of $743 million was the highest level generated since 2011, aided by the improved gold price, however, partly offset by lower gold output, higher taxes and royalties and unfavorable working capital movements relating to inventories, export duties at Cerro Vanguardia and VAT at Geita. The movement in inventories relates mainly to a strategic decision by management to increase consumable stores and reagents levels, specifically at our African operations, in order to mitigate for potential supply chain disruptions, which may result from the ongoing COVID-19 pandemic and to assist in the ramping up at the Obuasi operation. While we received cash receipts of $140 million from Kibali during the year or $49 million received in the fourth quarter, free cash flow continues to be impacted by the slow repatriation of cash from the DRC with attributable share of the cash awaiting repatriation at the end of the year amounting to $424 million.
Despite the above, our free cash flow generation for 2020 was more than the previous 5 financial years in aggregate. Free cash flow pre-growth capital, which is our dividend metric, rose to over $1 billion at the $11 billion level and in line with the revised dividend payout ratio of 20%. The Board approved a fivefold increase in the dividend distribution to $201 million. This reflects an appropriate balance in our capital allocation discipline, demonstrating our ability to balance the competing capital needs of the business while delivering improved value to shareholders.
Our balance sheet strategy continues to support our capital allocation discipline with adjusted net debt at $597 million, 62% lower than last year and at the lowest level for the last 10 years. We remain committed to maintaining a flexible balance sheet with an adjusted net debt-to-adjusted EBITDA target ratio of 1 times through the cycle. Our current ratio of 0.24 times is well below that target. Liquidity remains strong and continues to provide good flexibility in a volatile climate. We currently sit with cash balances exceeding $1.3 billion, excluding the Kibali cash balance of $424 million.
From a liquidity perspective, cash is mainly supported by the undrawn multi-currency $1.4 billion RCF. During the year, we successfully managed to raise a new 10 year bond of $700 million priced at 3.75%, the lowest achieved by the company for a bond offering. The upfront proceeds of $200 million received from the sale of the South African assets, we utilized to settle all local debt. We canceled our South African credit facility, as well as $1 billion standby facility we entered into at the onset of the COVID pandemic.
We remain strongly levered both to the gold price and currencies, and we expect cash flow generation across the business to continue to benefit from prevailing current market conditions, as well as from production and efficiency improvements in our business. All of this was achieved without the need to put shareholders for new equity in the last decade.
Finally, while our credit ratings remained unchanged during the year, there were revisions to the outlook positions. Moody's maintained an investment grade rating for the company with the outlook revised to negative and S&P maintained the rating one level below investment grade with the outlook revised to positive.
Looking at the cost performance in detail year-on-year, our cash cost increased 6% to $819 per ounce, $43 per ounce higher than the prior year. This reflected lower grades, inflationary pressures and higher gold price-related royalties, the impact of which was partly softened by the benefit of weaker local currencies, favorable throughput volumes and other efficiencies. Underground recovered grades for the Group were around 17% lower year-on-year. Lower underground recovered grades were experienced at Geita, Kibali, Cerro Vanguardia, AGA Mineração and Serra Grande. Open pit recovered grades reduced at Tropicana and Siguiri.
All-in sustaining costs for the year were 6% or $61 per ounce higher year-on-year at $1,059 per ounce on the back of higher cash costs and the previous flagged higher sustaining capital spend. This related to additional investments in ORD, deferred stripping and exploration in order to improve both mining flexibility and ore body confidence, as mentioned before. We have seen the early benefits of these ongoing investments in our end-of-year ore reserve and mineral resource declarations. COVID-19-related impacts resulted in all-in sustaining costs being approximately $55 per ounce higher for the year due to the estimated production impact of 140,000 ounces and associated cost impacts, predominantly related to the South African lockdown.
We continued our multiyear trend of meeting or beating our guidance during 2020. And in terms of commitments made, take pleasure in extending our guidance to beyond in-year with more detailed guidance for 2 years and indicative outlooks on the key production cost and capital metrics for a further 3 years. In line with past trends, production for 2021 is expected to be weighted to the second half of the year. Expected production is guided to end between 2.7 million and 2.9 million ounces, and all-in sustaining costs are expected to be between $1,130 per ounce and $1,230 per ounce for 2021. The uptick relates to an expected increase in sustaining capital expenditure, which forms part of the all-in sustaining costs. As mentioned before, this increase results from our continued reinvestment strategy in exploration or reserve development and deferred stripping. In addition to that, there is the increased regulatory requirements for tailings storage facilities compliance in Brazil, and there's also further spend required for TSF infrastructure at other operations, including Iduapriem, Tropicana and CVSA; and lastly, the shift from growth capital to sustaining capital and ore reserve development at Obuasi.
Total capital expenditure is guided at $990 million to $1.114 billion for 2021. Non-sustaining or growth capital is guided at $270 million to $320 million for 2021, which includes the remaining funding requirements for the Obuasi growth project, the 2 Colombian projects, the Nyamulilima Open Pit at Geita, the Golden Delicious pit at Sunrise Dam and the Block 2 project at Siguiri. The 2 long-life low-cost Colombian projects, which will come up for Board approval later this year and will have a material impact on capital production and cost profiles of the company over the longer term.
Sustaining capital expenditure of $720 million to $820 million constitutes about 72% of the total capital outlook in 2021. On a per ounce sold basis, this amounts to $260 per ounce to $290 per ounce with the main reason for the increase compared to 2020 relating to the sustaining capital expenditures previously mentioned. These costs will remain elevated in the near term, but will fall back to more normalized levels of between $160 per ounce to $200 per ounce from 2023 onwards. We remain mindful that the further waves of the COVID-19 pandemic, its impacts on communities and economies, and the actions of authorities may take in response are largely unpredictable.
I will now hand over to the Sicelo to cover the Continental Africa operations.
Thanks, Ian, and greetings, everyone. Let's take a look at the African operations. As the region continues to reap the benefits of the operational excellence drive and efficiency improvements, we delivered another strong production and cost performance, with gold production increasing by 4% year-on-year to 1.6 million ounces at a total cash cost of $757 an ounce for the year compared to 1.54 million ounces at $759 an ounce during the prior period. The region's all-in sustaining cost was $935 an ounce for the year compared to $896 an ounce for 2019. This 4% increase was largely driven by higher royalties and COVID-related costs. The region generated free cash flow of $648 million for the year compared to $232 million during the previous year. This is the highest free cash flow generation in the region for a single year.
Going -- now going into a little bit more detail on each asset. In Tanzania, Geita produced 316,000 ounces at a total cash cost of $722 an ounce for the second half of 2020 compared to 361,000 ounces at a total cash cost of $594 an ounce for the second half of 2019. The decrease in 2020 production was due to the rescheduled SAG relining and the planned ball mill relining and inspection, which resulted in lower tonnes treated. Total cash costs were higher for the period, driven by lower production, utilization of stockpiles and higher royalties. For the year, Geita delivered an exceptional performance, achieving 623,000 ounces of production, the third highest since commissioning in 2000 at a total cash cost of $641 an ounce for the year compared to 604,000 ounces at a total cash cost of $695 an ounce in the prior year. Tonnes treated were 4% higher due to stable plant operations. Lower total cash costs were driven by a buildup of ore stockpiles and a decrease in fuel costs, partly offset by higher royalties due to higher gold price.
In the DRC, Kibali contributed production -- attributable production of 183,000 ounces at a total cash cost of $663 an ounce for the second half of the year compared to 178,000 ounces at a total cash cost of $605 an ounce for the same period in 2019. This represented 2% year-on-year production increase, mainly as a result of an increase in plant throughput. Total cash cost increase in the second half of the year due to movement in ore stockpiles and higher royalties. For the year, Kibali delivered attributable production of 364,000 ounces at a total cash cost of $629 an ounce compared to 366,000 ounces at a total cash cost of $572 an ounce in 2019. The cash costs increased due to higher operational cost, stockpile utilization and increased royalties.
In Ghana, Iduapriem production for the 6 months ended December 2020 came in at 138,000 ounces at a total cash cost of $719 an ounce compared to 139,000 ounces at a total cash cost of $895 an ounce in the second half of 2019. Iduapriem matched its 2019 production record and produced 275,000 ounces at a total cash cost of $731 an ounce for the year compared to 275,000 ounces at a total cash cost of $815 an ounce in 2019. The 10% decrease in total cash cost resulted from capitalization of pre-stripping mining costs at Teberebie Cut 2. This was partly offset by increased royalties as a result of higher gold price received and lower stockpile addition in 2020.
Obuasi entered Phase 1 commercial production in Q4, ending the year with total capitalized and operational production of 127,000 ounces. Graham will provide an update on the progress of the Obuasi growth project shortly.
In the Republic of Guinea, Siguiri's half year production increased by 7% year-on-year to 116,000 ounces at a total cash cost of $1,357 an ounce compared to 109,000 ounces at a total cash cost of $1,100 an ounce for 2019. For the second half of the year, the total cash costs increased significantly year-on-year due to higher mining costs and processing costs resulting from the hard rock type, additional costs incurred to resolve operational challenges at the mine and [mineral] inventory challenges.
For 2020, Siguiri's attributable production of 214,000 came in slightly higher than the previous year of 213,000 at a total cost of $1,293 an ounce for the year compared to $1,100 an ounce for 2019. Total cash costs were higher as a result of higher mining volumes and higher processing costs resulting from increased hard rock mining and processing compared to more traditional ore treated in the previous year and royalties. I will focus more on Siguiri and the combination plant in the next slide.
I'm proud to announce that the initial challenges with commissioning of the plant at Siguiri have been successfully completed and the combination plant project has officially been closed out. This has been a result of the focused effort by our technical teams that has led to this significant turnaround. This gives us the confidence for delivery in 2021 as our objective for the Siguiri mine is to be a 300,000 ounce attributable producer at an all-in sustained cost at or below $1,100 an ounce. The Q4 recovery effect has showed a 7% quarter-on-quarter increase, reaching 83% and the recovery improvement trend is increasing, as will be shown in our Q1 results in March.
Significant process modifications were affected despite COVID-19 delays and new equipment installed to overcome the metallurgical recovery challenges experienced. Further, engineering optimization of various components augmented the consistent incremental recovery improvements highlighted in the top right graph. Successful optimization initiatives that we’ve undertaken include: improvements in milling and classification circuits, further optimization of the gravity gold recovery circuits, improved carbon management and reagent control, completion of the CIL tank conversion project. Additionally, engineering reliability improvements, particularly across the crushing and milling circuits, together with revisions to the operating discipline helped to reduce the process variability, further contributing to the success achieved. This turnaround gives us strong confidence and demonstrated deep technical talent within the company.
Looking at Geita. With production of 623,000 ounces and improved all-in sustaining cost at $814 an ounce for 2020, it is truly a Tier 1 asset. The aggressive exploration strategy since 2018 has resulted in a steady rate of annual replacement of depletions of 2020 ore reserve growth amounting to 1.4 million ounces before depletion. This is a great achievement and aligned with our strategy of increasing ore reserves at Geita. The development of the underground operations of Geita continued during 2020 with the Geita Hill underground mine permitting and portal establishment and engineering infrastructure completed during Q4 of 2020. Ore is expected to be accessed by late 2021. Nyamulilima Cut 1 and Cut 2 allows Geita to continue having flexibility of open pit operations to supplement the now predominantly underground operations. Environmental permitting for this project has been obtained and the mining plan approval is well advanced. Nyamulilima area contributed just under 1 million ounces of declared ore reserves at the end of 2020, with highly prospective targets being prioritized over the next five years.
In conclusion, as I look back at the past year, progress has been made in all our key focus areas. As we move into the new year, these areas remain critical to our success as a region and a company. Our focus is to increase the value of the African portfolio and this will be achieved through the following: keeping safety as our first value and remaining COVID-19-alert at many of our jurisdictions as many of our jurisdictions are experiencing the second wave; secondly, keeping ESG at the core of decision-making; thirdly, continuing to build on strong performances at our key assets of Geita and Kibali, whilst ramping up Obuasi; continuing to build on the positive momentum at Siguiri whilst developing Block 2 will create further optionality; advancing exploration projects to continue yielding reserve growth, primarily at Geita, Siguiri and Kibali over the next 5 years.
With that, ladies and gentlemen, I would like to thank you and now hand over to my colleague, Ludwig, who will take you through the international portfolio. Thank you.
Thank you, Sicelo. The international operations had a stronger end to the year despite the continued COVID-19 disruptions. As we flagged through the year, Argentina was the most severely impacted, which included a voluntary 18-day suspension in November to contain a possible outbreak, followed by a 16-day mandatory industry closure in December. In Brazil, we continued to record COVID-19 infections, while Australia experienced a shortage of operators due to the travel restrictions.
Starting with the Americas, the region produced 476,000 ounces of gold for the year, slightly below the 485,000 ounces delivered in the same period last year. Despite the drop in production, all-in sustaining cost was lower at $1,003 per ounce compared to $1,032 per ounce, mainly due to the well-managed cash costs across the region. We saw exceptional exploration results recorded at Serra Grande and CVSA. Serra Grande's ore reserves grew by 53% net of depletion. CVSA ore reserves grew by 23% net of depletion. The Brazilian assets recorded a strong second half, delivering 40% increase in production when compared to the first half of 2020. Important to note, we recorded improved plant and mine performances throughout the tail end of the year as a result of our operational excellence to drive. This performance was largely due to AGA Mineração achieving a 37% increase in production in the second half. This was driven by higher tonnage mined and treated in both the Cuiabá and Córrego do Sítio complexes. The strategy was aimed at prioritizing dry ore and sorting ore stocks at healthy increased throughput. Still in Brazil, Serra Grande’s performance was largely impacted due to the COVID-19. Nonetheless, the mine recorded a strong second half seeing a production rise of 53%.
Moving to Argentina, Cerro Vanguardia experienced unprecedented operating challenges related to managing the COVID-19 regulated and voluntary stoppages through the year. Production for the year was 173,000 ounces compared to 225,000 ounces in 2019. As we previously flagged a decrease in production was mainly due to the lower planned grades aligned to the current life-of-mine plan and lower tonnes treated as a result of the COVID-19 pandemic impact.
Shifting to Australia. The region produced 553,000 for the year compared to 614,000 in 2019. Production was lower mainly due to Tropicana moving to a stockpile strategy as we progress our capital programs on site. In anticipation of moving to a stockpile strategy, we moved to increase the throughput as well as saw higher metallurgical recoveries at the plant, which helped partially offset the drop in the mill feed grade. Open pit ore from the Boston Shaker and Havana South pits and the new Boston Shaker underground mine is being supplemented by stockpile drawdowns while the Havana Stage 2 cutback continues. The cutback will provide access to the deeper Havana open pit ore from 2022 onwards. The Boston Shaker underground mine achieved commercial production during the second half of 2020, producing 400,000 tonnes of ore. The mine is on track to reach its design production rate of 1.1 million tonnes of ore per annum in the first quarter this year.
At Sunrise Dam, production was marginally higher than last year as improved metallurgical recoveries offset the slightly lower throughput. I'm pleased to report that early underground drilling results have extremely encouraging results, which includes the recently discovered Frankie orebody within the Western Ramps and extensions of the Vogue and Carey Shear ore bodies. Waste stripping at Golden Delicious satellite deposit 12 kilometers from Sunrise Dam processing plant began in December quarter after the mining contract was awarded to the indigenous partner, Carey Mining. Grade control is ahead of plan, and mining is on track to deliver first ore from the pit in June quarter this year. Approximately 18.5 million tonnes of material containing 3 million tonnes of ore will be mined in total from the Golden Delicious pit. The pit will be mined in 2 stages, reaching the ultimate depth of 155 meters and a diameter of approximately 420 meters.
So in summary, although year-on-year production dropped, operating costs were well managed despite the higher spend on sustaining capital as the projects were completed. Initial results of our investment in ORD and exploration was extremely positive in 2020, as I have touched on. As a result, we improved our geological confidence at our sites, giving us greater confidence in the ability to deliver to our mining plans.
Looking ahead, the international has a clear path to create value by optimizing existing operations and continuing to develop new projects, which will add low-cost ounces to the portfolio. The team remains committed to safeguard the health, well-being and safety of our people and mitigating the lingering impact of COVID-19 on our operations.
The focus for 2021 is to maximize the value of the portfolio by driving operational excellence to continuously improve costs, capital and efficiencies; improve resource confidence and grow near-term reserve to create flexibility in our operations. In addition, the international operations will be investigating the application of operational technology at our operations and strengthen our focus on ESG as a dominant priority, which need to be considered across our portfolio. This includes accurately understanding our current and future carbon emissions and proactively developing projects to reduce our carbon footprint.
With that, I'll hand over to Graham to cover Obuasi. Thank you.
Thank you, Ludwig. Today, I'll provide an update on Obuasi. Following the first gold pour in December 2019, the mine ramped up to the Phase 1 capacity of 2,000 tonnes per day. Gold production for the year was 127,000 ounces, close to the 130,000 ounces foreshadowed last quarter. Quarter 4 2020 was the first quarter of commercial production and with 30,000 ounces at an all-in sustaining cost of $1,316 an ounce. Gold production was curtailed by a 22-day tie-in shutdown for Phase 2 construction.
The Phase 2 to achieve an install capacity of 4,000 tonnes per day was 90% complete at the end of the year. We are still on schedule to commission the Phase 2 mills and associated infrastructure in quarter 1 this year. The mills have been run successfully for extended periods. The KRS shaft and conveyor systems have been commissioned. We are now commissioning the first ore passes and sizing systems. The remainder of the underground infrastructure will be completed by midyear. This includes the second underground ore passes and tips, the GCVS vent shaft and fans and the paste fill.
Ramping up mining is progressing somewhat slower than we planned due to COVID-related issues. While developed stocks and drilled stocks are healthy, the second COVID wave that hit Ghana and Obuasi in early January is impacting production. Our priority, as you would expect, is to look after our people. Our strict COVID protocols remain in place, and the on-site testing facility is helping us manage the situation. Nevertheless, our testing and contact tracing systems have seen key operators placed in quarantine. This peaked with approximately 100 key people being in quarantine, of whom many are our key operators and supervisors.
Australia's tightened travel restrictions has not helped with crew rotations for expatriates. We are dealing with this issue by prioritizing the operating development in the short-term, prioritizing ore haulage and hoisting through the shaft. We're also expediting training and the recruitment of experienced operators and supervisors within Africa. We are still targeting ramp up to 4,000 tonne a day in quarter 2 but this may overflow into quarter 3. Certainly, this has an impact now but the overall project is looking good. Capital is under control. Geology is looking good, evidenced by the increase in reserves and good reconciliations. Plant metallurgy is also achieving throughput and recovery targets. Fundamentally, the project is shaping up as planned except for the COVID impacts of the past year.
These photos illustrate our progress on Phase 2. Commissioning of the SAG and ball mills has been successfully completed. The flotation -- flash flotation and BIOX circuits are running well. Overall plant recovery is on target in the mid to high 80s. This will further lift when gravity, flash flotation and regrind circuits are brought online. The KRS shaft and winder refurbishment has been completed and commissioned. The paste plant is completed. All that remains is the installation of the transfer pumps to move paste to the new paste delivery collar positions.
In summary, the redevelopment has addressed all the legacy issues of the past. We are on the final lap of the redevelopment. The pandemic is presenting challenges but the team is focused and determined to deliver what has been promised.
Thank you, and I'll hand over to Tim.
Thank you, Graham. 2020 was one of the best recent years for ore reserve addition by the company and across the portfolio. It shows the potential being unlocked by the strategic investment being made into drilling and ore reserve development directly linking back to delivering reserve life extension.
Our mine site exploration drilling topped 1 million meters for the year. This was a 27% increase achieved compared to the prior year, and we have more than doubled the levels that we were achieving 5 or 6 years ago. We plan to continue this level of increased strategic investment in our mine sites for the next 2 years to ensure that they have better operational flexibility to deliver planned production and to support our discovery process to be able to maintain ore reserve replacement and uncover further opportunities for reserve life growth.
Strong ore reserve gains are made possible on a year-to-year basis because of the reliability of the mineral resource to ore reserve conversion process we have in place at our mine sites that's backed by a long history of demonstrated success. These waterfall charts illustrate the ore reserve gains across the portfolio in 2020 with some of the larger gains coming from Obuasi, Geita, Kibali, Serra Grande and Cerro Vanguardia.
Equally important in 2020, on the back of our targeted exploration program and the divestment of the assets in Mali in South Africa, we recorded a 45% increase in the average grade of our approved and probable mineral resource.
Looking ahead, we expect this strong momentum to continue into 2021 as we continue to unlock latent value in our portfolio through our ability to discover and successfully grow ore reserves. Again, this focused investment strategy is expected to continue across the portfolio for the next 2 years.
And with that, I'll hand back to Christine. Thank you.
Thanks, Tim. Ian has been through the guidance in detail, but let's take a high-level view of the next 5 years. We see an average 5% compound annual growth in production. Over the next 4 years, the gains come from brownfields options in our existing portfolio. Obuasi makes big additions in the first 2 years, while Australia and Brazil and Africa operations each make valuable contributions through the period. In years 4 and 5, Colombia kicks in. Over the same period, we see costs improving. Some of that relates to TSF compliance spend in Brazil coming to an end. We will also complete stripping programs at Tropicana and Iduapriem. There's also the tapering off of the intensive investment in ore reserve development.
So whilst we see an increase in all-in sustaining costs in the short-term, we believe that bringing in ounces at a competitive cost into our current operating sites is the highest return capital we can spend. The added benefit is the longer valuation runway for the assets as we start to stretch their lives out further ahead of them. We see this with the additional 1.4 million ounces at Geita, and we'll have many more examples like it in the years ahead.
In short, we're proving the short life sceptics wrong. And after years of rationalizing our portfolio and selling and closing mines, we finally have a clear and credible path back to disciplined, high-return and low-risk growth.
We have our work cut-out for us. Keeping our people safe and well and supporting our communities through this incredibly difficult time is at the top of our priorities. That includes finding innovative and effective ways to help our host governments in their vaccination efforts so we can work together to find a return to a more normal way of life. That’s good for everyone and good for our business.
We have 2 excellent projects in Colombia wrapping up feasibility studies, after which they'll come to our Board for approval. That process takes a clear outlook at the best, most cost-effective and low-risk mode of execution.
Obuasi is tantalizingly close to completion, but we need to manage our way to the full ramp-up carefully. This is a high-margin, multi-decade asset, and we won't compromise that future. And we need to drive our exploration program forward to build on the strong momentum we've created in reserve conversion this past year. Keeping our eye on the costs, especially as our capital edges higher in the next 2 years, we will be operating better. And working patiently to secure the release of our cash from the DRC and to restart VAT offsets in Tanzania are absolute priorities to ensure those assets are fairly valued by the market.
That's it from me today, and we look forward to a much more detailed tour through the business and our strategy tomorrow.
With that, I'll take questions.
Shilan Modi from UBS.
A couple of questions from my side. In terms of ore reserve development, you mentioned that you're going to be spending cash on this for the next couple of years. Why don't make this a continuous process so that you continuously spend throughout the cycle? Maybe just your thoughts on that. Do you have explicit production guidance for Obuasi for 2021? I see you gave us on your long-term guidance, but nothing for 2021. And then maybe around your planning assumption, I believe this $1,400 an ounce. What margin do you expect -- cash flow margin do you expect to generate at $1,400 an ounce? And then lastly, can you just give us some guidance in terms of the cash lockups at Kibali and Tanzania?
Shilan, could I ask you just to ask the very first question of yours again. We missed the first bit of it.
Sure. It's in terms of ore reserve development, you've got quite an intensive program for the next couple of years. The question is, why not continue the spend throughout the cycle to just have a continuous budget for this every year, whatever? So instead of a cyclical type of thing, it's just a continuous process.
Thanks for those questions, Shilan. I think quite importantly, when it comes to ore reserve development, we do have a continuous budget through the cycle. What we did last year is we did up that budget by about $30 an ounce. And I think, certainly, you can clearly see the benefits of that coming through with the additional reserves that we've declared. I think going forward, for the next 2 years, we've had to bump up some of that ore reserve development. And like you say, it's also driven by where our assets are in their lives and what the requirements are. But I think certainly even beyond the bump up that you see in the next 2 years, you will see a continuous budget for ore reserve development as we go forward.
I think, Ian, in particular, will unpack some of the details relating to the [SIB] spend. So in addition to ore reserve development, there's also deferred stripping and the TSF compliance capital that does actually impact our [SIB] guidance specifically for the next 2 years. And from 2023, you see the more normalized sort of [SIB] spend that will come through.
As regards specific guidance of Obuasi, I'm going to hand that over to Graham to talk to. And then in terms of the margin that we planned for, I'll ask Ian to comment, and then I'll wrap up depending on where we land on that. But we don't give specific margin guidance because it also depends on various analysts that have got their own assumptions around the gold price. We've just given you our planning price. But Ian will actually give you some more detail. And remember, we are unpacking more of our longer-term outlook tomorrow at the Capital Markets Day.
So with that, Graham, can I hand over to you to talk to the Obuasi-specific guidance, how do we think about that? And clearly, steady state, as we said, reaching, it will be likely in Q4 this year.
Thanks, Christine. Overall for the year, a reasonable way to think of Obuasi is the ramp-up through quarter 2, quarter 3, leading to steady state in quarter 4. We expect the overall annual production to be around 250 to 300 depending on how that progresses. So certainly lower in the first half and rising in the second half.
Thanks. Ian?
So I can maybe just answer the stay-in-business question. As Christine just mentioned, the step-up this year, I've mentioned in my discussion, a couple of things. The Brazil tailings storage facilities compliance and additional tailings storage facilities infrastructure spend at Iduapriem, Tropicana and -- mainly at Iduapriem and Tropicana amounts to about $30 to $40 per ounce as included in that [SIB] dollar per ounce number and then obviously rolling into the all-in sustaining cost. On the stripping -- additional deferred stripping -- and again, mainly relating to Tropicana and Iduapriem, you will be looking at about a $15 to $25 per ounce margin. And then with regards to exploration -- further exploration initiatives as part of that reinvestment -- targeted reinvestment strategy of between $10 to $20 per ounce. So that's that question.
With regards to the planning margin, the planning margin, we've run -- business planning analysis has been done at that $1,400, $1,450 per ounce real price. On those types of margins, as Christine has mentioned, we'll give full details of the expected free cash flows as well as dividend payouts we anticipate at various price ranges from $1,300 through to $1,900. But at the current business planning scenario, that still allows us to fulfill all of our capital needs on our capital allocation discipline as well as continue to pay out the dividends in terms of the higher payout rate.
The next question we have is from Liam Fitzpatrick from Deutsche Bank.
Two questions from me. Firstly, on Colombia. I'm sure we're going to get more details on this tomorrow. But are you able to break out the amount that’s included in your CapEx guidance for 2022? And can you at this point just remind us of the total project budgets for each project? And then just on Obuasi, you kind of covered the ramp-up. Once you hit that 350,000 to 400,000 ounce target run rate, what is the sort of cost structure that you're expecting to be at by the end of this year?
Okay. I'll handle the Colombia one. And I think bear in mind that both these projects are dependent on Board decisions that should be made later this year. I think quite importantly is also the profile of the capital spend will depend on how this features out in the actual capital profile going forward. So I think to Gramalote, we prefer to give ranges. I think certainly, we own 50% in Gramalote. And there, the capital range is $900 million to $1 billion, and our share being 50% of that will put it at about $450 million to $500 million.
In terms of the profiling of the capital spend, the build period is over 2 to 2.5-year period. And so certainly, it's fairly evenly spread over that period. And so certainly, that's how you can expect it to see in the capital budget from 2022 and 2023 for Gramalote. Quebradona, also a range there of, I'd say, $1.2 billion to $1.4 billion, 100% owned, 4-year capital spend period. And the capital profiling is more back-ended towards 2023 to 2024. And in both these projects, you've got production -- so for Quebradona, the production sort of comes through in 2025, and we talk second half of 2025. Gramalote, in particular, it's 2024, also the second half of 2024. So it's just sort of to relate the CapEx spend to when we are expecting production ramp-up as well. Graham, if I can hand over to you for Obuasi.
Yes. Thanks, Christine. We'll provide an update at tomorrow's Market Day. But for now, when the project has ramped up, production will be around 350,000 to 450,000 ounces a year. It will be on the lower end for the first period and then on the higher end after that as we get down into the deeper, higher grade sort of Block 11 area. And all-in sustaining costs will be in the range 725 to 825. So in terms of the next years after we've ramped up, so that's the back end of this year moving into 2022, I'd think in terms of 350 to 400 and cost being in the area of around 800 to 825. Thank you.
Dominic O'Kane from JPMorgan.
Could I -- I just have 2 quick questions. So coming back to the cash tied up in DRC. So with the sort of the timing effects, I think we're possibly looking at close to sort of $500 million there from your portion. What are your thoughts about how you redirect that amount of cash when it ultimately comes back? Given the sort of debt-free status of the balance sheet, is it possible that investors could expect a special capital return? Or will that cash be redeployed for growth opportunities? And second question, again, just sort of coming back to the long-term profiling of specifically sustaining CapEx. We're seeing across the industry that there's a lot of catch-up sustaining CapEx, and again, the spend that you've announced on tailings facilities, is this a normalized run rate now for the industry or for AngloGold as we look forward on a 5-year view? Is -- should we be extrapolating that $700 million to $800 million of sustaining CapEx over a long-term time horizon?
Thanks for those questions, Dominic. I think importantly is how would the cash be deployed? Firstly, you're absolutely correct, it's close to $500 million. Our share at the end of December was $424 million. And just given the statements made by Barrick very recently, we expect to receive that cash in March of this year. And I certainly do -- that would be the first chunk, and I do expect the remaining chunk of cash to come through shortly thereafter. In terms of how would we deploy it? I think, bear in mind, we are now paying biannual dividends. And so there is a formula that we have 20% of free cash flow generation pre-growth. So shareholders do get the first slice of the pie before growth capital. And so you should expect to see that coming through in form of improved dividends going forward. And of course, the balance of the cash would be used to self-fund our growth strategy, both the improvement in reserve confidence as well as for our growth projects going forward.
And of course, we will always assess the appropriateness of our dividend policy going forward. We do aim to be competitive with our peer group in that regard. And so that will be constantly assessed going forward. I think what you've got to bear in mind is we've committed to self-fund our growth. There will be no equity raised for the growth, and hence, it is -- it will be funded through internal cash flow generation as well as through the headroom and the facilities that we actually have. And so that's how we expect to actually fund that going forward.
In terms of sustaining capital, I don't know if you want further information, but I think certainly, we've spoken to a normalized level being $160 to $200 an ounce. This is where we were at. There's a specific need now for us to increase the sustaining capital spend and certainly going forward. I think don't look at it in absolute terms, look at it on a dollar per ounce basis and related to the production guidance that we've given you. And as we've indicated, the production for the next 2 years will grow on a compound annual growth rate basis by 2% over 5 years. It will be about 5%. And so you can apply that normalized sort of $160 to $200 an ounce to that guidance we've given you, and that's where we see it going over the longer term.
Thank you. Sir, do we have any questions from the webcast?
Yes, we do. I'm going to start off with a question from Marcelo Kim at Paulson, and it's quite similar to a question from Ahmad Hakim at Oasis. Christine, how much cash do you have locked up collectively in the DRC and Tanzania? Barrick said last week that they expect to release in the next couple of months. Your comment on that? And what is the status in Tanzania?
Okay. So these are 2 -- I'd like to deal with Tanzania and the DRC separately. So in the DRC, I think we spoke to the $424 million. That is the cash that needs to be repatriated. There's also a VAT receivable that -- of $65 million relating to Kibali. And none of these amounts are actually included in the cash balance on the balance sheet. I think in particular, we were -- the cash was imminent at the end of last year. However, there has been some political instability in the DRC. You would have seen that the Prime Minister resigned in January. A new Prime Minister was appointed about a week ago. And certainly, the President Tshisekedi, he is consolidating control in his cabinet. And we're expecting the cabinet really to be reconstituted fairly soon. And once the cabinet is reconstituted, that links to the immediate release then of cash that we expect to come through. So I think we are seeing positive -- more positive movement from a political perspective in that regard, and that will aid the cash release. And of course, Mark Bristow did put out public statements when it came to the cash release. And we, of course -- that the engagement really happens by Barrick directly with the DRC authorities. We have regular dialogue with Barrick in that regard, and that is certainly the comfort that we are receiving from Barrick as well.
As regards Tanzania, there is a VAT receivable amount. So just to affirm, the cash itself, we actually do receive the dividends quite seamlessly from Tanzania. It's really the VAT receivable. So the bulk of that amount does relate to historical VAT receivable that has accumulated from July 2017 to present. And we have engaged with the tax authorities in that regard. I think just bear in mind that this amount of $138 million does actually sit on our balance sheet as a receivable. So it's fully accounted for in our books. It does get discounted at every period end. And of course, what I can say is -- on a positive note is from July 2020, the legislation in the DRC was amended to allow for the offsets of these -- of the VAT prospectively from July going forward. And we -- it's really about the government following through on the administrative process to verify the VAT, so we can actually offset it against corporate taxes. We've had agreements with the government previously in this regard, whereby VAT receivables have been agreed to be offset against corporate taxes in the past. And hence, we are continuing dialogue on that -- in that regard. And so certainly, we'll keep you informed on the agreements that we do reach with the government.
Thanks, Christine. I think that was clear. The next one is from Jonathan at OysterCatcher Investments here in South Africa. He says, on Slide 15, why does all-in sustaining costs decline from 2023 through 2025?
Okay. Ian, can I ask you to just unpack that, please? Thanks.
As we've explained, the next 2 years, 2021 and 2022, we've got the additional investment on the sustaining CapEx side, 3 areas: the continued targeted reinvestment strategy, where we look at deferred stripping at various -- at certain operations, ORD development at other operations and the continued exploration drive; coupled with the Brazil tailings compliance and other tailings expenditure that's required; as well as then Obuasi for the first year coming into its own with regards to sustaining CapEx and ore reserve development. As we then go through the years, that higher position holds for 2021 and 2022, and then it starts to drop back in terms of our guidance to our normalized levels of $160 to $200 per ounce as Obuasi, for example, ramps up and as production starts to increase in terms of the guidance we've put out there at the other operations. Basically, that is the reason why it comes back to the normalized levels. Thanks.
Thanks very much, Ian. Dinei, let's go back to the line.
Of course, sir. The next question we have is from Arnold Van Graan from Nedbank.
Christine, I don't want to hammer the point. You already talked a lot about this. But in terms of the cash flows out of the DRC, how do we think about that? Does it come in as 1 amount or 2 amounts? You sort of alluded to that it could come in as 2 amounts? Or will it come through as -- over a period of time?
Thanks, Arnold. I think how you should think about it is that the cash will come through in chunks. There are 2 mechanisms. The one is a more permanent mechanism, which seeks exemption from the changes in the mining code that happened in 2018, late 2018. And what that allows for is for 40% of the free cash flow from the DRC to be declared as dividend. 60% is -- of the free cash flow is what you are seeing in that $424 million balance. I think, certainly, in terms of what Barrick has referred to in their statements is they're expecting $500 million to come through. And so half of that would be our cash coming through, and hence, the balance would actually come through shortly thereafter. And in terms of the discussions that we've had with them previously, it was also to expect the cash to come through in chunks, but in close succession to each other. The more permanent mechanism would actually allow for the cash to flow through seamlessly, but that would require approval from Parliament.
The next question we have is from Patrick Mann from Bank of America.
I wanted to ask about Colombia. These 2 projects are obviously coming together in short order. How do you think about that both from a balance sheet perspective and also just kind of concentration approving 2 greenfield projects or big greenfield projects in one jurisdiction? So it's $2 billion that's coming pretty much at the same time and in the same place. Does that affect the way you think about the project at all?
Thanks, Patrick. That's a good question. Of course, let me first address balance sheet. I think quite importantly is that we've got sufficient headroom in our balance sheet to fund both projects. And we are looking at financial risk mitigation, in particular as it relates to the Quebradona project. And that will entail a number of risk mitigation measures, which would include offtake agreements as well as project financing. And clearly, we are exploring other alternatives as well. But I think just to give you comfort that our balance sheet does -- we have catered for the funding of these projects through internal cash flow generation and through our facilities. I think just bear in mind, just from a financial perspective, both of these projects, even if their investment decisions were made at the same time, there's sort of a natural phasing in terms of the capital profiling. Gramalote's capital gets spread very evenly over sort of a 2-year period, and Quebradona is over a 4-year period. And like I said, the capital of the last 2 years is -- let's just say the capital gets spread over a 4-year period, but it is -- it does peak in the last 2 years of the profile.
In terms of risk, because that's really what you're talking to, we've been in Colombia now for quite a long time, more than 10 years. We're familiar with the jurisdiction, and we believe that it is a low-risk jurisdiction. It's got a very good fiscal framework. And I think, certainly, in the engagements that we've had with the government authorities through the cycle, I'd say that it's a very constructive relationship. And both these projects are quite strategic to the country. And so that certainly gives us comfort from a jurisdictional perspective. I think, certainly, Stewart is closer to the social aspects because, as you know, the Quebradona project will require the environmental permit as well as the mining license. And any decision to proceed with the project would mean that we would have to get those permits, and we're actually seeing very good traction in that regard.
Likewise from an execution capability perspective -- and maybe Graham would like to give you more comfort around that. But I think certainly, with us transferring operatorship to B2Gold for Gramalote, I think they will be involved at Gramalote, and they've certainly got a good track record in project execution in that regard, and so that we can actually focus on the build of Quebradona. And we've built large projects quite successfully, I think Tropicana a case in point, Obuasi is a case in point. And of course, we've got confidence in our execution capabilities. And where we do lack that, we will actually be supplementing -- we'll acquire the skills that are necessary to build these projects. Graham, do you want to add on to what I've said relating to execution capabilities?
Thanks, Christine. I think you've covered it thoroughly. There's not too much more to say. I think the key point was that we will focus on Quebradona and B2 will manage and handle gramalote. We did a similar thing when we were building Kibali, managed by Randgold at the time and Tropicana, managed by us, and that was done in parallel. I think the other point is that the projects, though they're concurrent, one is much quicker than the other, Quebradona over about a 4-year period and Gramalote over a 2.5-year period. So -- and as we roll from the feasibility study into the project implementation, we'll look for as much continuity as we can in the same way that we managed Tropicana. So I think it's quite doable. Christine has explained the financial aspects, and I think from a project execution point of view, we're well set up to manage it.
One more quick question. We see that the process is still underway in terms of appointing a permanent CEO. Is there a timing that we can expect? Or when should we expect conclusion to that process?
Well, Patrick, that is a Board matter. As you know, when the Board is -- they're well advanced in the process. They are attaching urgency to the process. And so when they're ready, they will issue an update to the market in that regard
The next question we have is from Jared Hoover from RMB Morgan Stanley.
I've got a couple of questions, please. I mean you've already indicated that your outlook, specifically around the CapEx, caters for your greenfield projects. And the last time I had a look at some of the numbers around -- I'll just use Gramalote as an example, it didn't quite hit your hurdle rate, 15% IRR at $1,200 gold. So I just wanted to find out if there's been any shifts to those guardrails that you had in place previously? And basically, what I'm trying to get at is to get a feel for how you think about balancing investment in this higher gold price environment versus protecting the company against asset write-downs if the gold price obviously goes in the opposite direction. I'll follow-up with another one after that.
Yes. So thanks, Jared, for the question. I think quite importantly to give you the comfort that, we do have a very disciplined capital allocation model and those guardrails do remain intact. Of course, returns are risk-adjusted by jurisdiction. And so a lower-risk jurisdiction, you will actually adjust the hurdle rate or your cost of capital that you would -- and returns that you would actually require for those projects. I mean, both of these projects are very attractive projects. We've been spending some time on it now for a number of years. They've been progressed up the value curve. We will continue to make prudent assumptions, be it the gold price assumption for Gramalote and the copper price assumption for Quebradona. And we'll continuously -- so apart from the prudent assumptions, it's also about stress testing it over the long-term in terms of the project metrics, be it capital, be it risk, execution risk and the like. So what I can say to you and just give you the comfort, we will give you a range of metrics when we're ready to put out the feasibility study before -- when the Board makes an investment decision on it, and you will have comfort that we do have attractive risk adjustment returns for these projects.
And then maybe just another one on your outlook. So I mean, obviously, the longer-term guidance that you've given us is based off your longer-term gold price assumptions and your long-term mine planning. But is there also a degree of dynamic mine planning that's happening in the business for maybe quicker payback projects that would realize good returns in the current environment? And to what extent is there any dynamism built into your 5-year forecast?
Yes. So we are an active portfolio manager, Jared. So you can expect that dynamic planning to happen as well. And of course, we -- so we've given you a long-term view, and that has been factored into the guidance that we've given you. But you can expect in terms of the focus that we have on the brownfields projects, it's very much to do what you're exactly saying. It's to focus on the sort of quick payback brownfields options that do generate higher returns. There is upside to the plans that we've got here. But I think if you attend the Capital Markets Day tomorrow, you'll get a better sense of, on an asset-by-asset basis, where the optionality is. And we'll be able to -- it will give you more of a flavor as to how we're thinking about this. Of course, the longer-term outlook is an indicative outlook. We've given a firmer sort of guidance for the initial 2 years. The longer term is an indicative outlook, and it's just based on the fact that we have got higher confidence related to the first 2 years. However, it's important to get you to think about the longer term as well.
Perfect. And just one more, please, if you don't mind. I thought your slide on Siguiri was quite interesting, and it looks like the mine to be up to about 300,000 ounces at about $1,100 AISC. I'm sure you'll give us more color tomorrow, but can you just give me an indicative idea of when it would hit that 300,000 ounces? And what are the risks for the project to not hit that 300,000 ounce level? I mean, it's had a bit of a checkered history. So I'm sure there might be some hurdles that might prevent you from getting there.
Yes. Thanks, Jared. I'm going to ask Sicelo to give you more a flavor on Siguiri and when we can expect to hit those 300,000 ounces.
Thanks, Jared. I think the first thing is the technical intervention that was a success in being able to figure out the geometallurgy, which was the actual -- the trick that we had to resolve with the combination plant. And now that we have completed the technical interventions in terms of the additional tank and carbon screens, and we have been able to consistently now achieve recoveries of well beyond the design parameters, it then gives us the ability to know that whatever ore type we put through that plant, we will be able to get recoveries that meet our objectives.
Secondly, what we are doing as well to augment Siguiri's plan is to bring in Block 2. We are investing about $30 million this year to build a road, about 30 kilometers road and some mining infrastructure to bring in Block 2, which comes in at an average of about between 1.5 and 2 grams per tonne. And that material is also oxide, which is what Siguiri has been sort of processing for the past 15 years. And that material is going to displace the marginal ore to further actually strengthen our plans going forward. Since the beginning of this year, we have been hitting that run rate of about 7,000 ounces a week. So when you annualize that, that takes you well into the 300,000 ounces mark on an -- I mean, 7,000 on an attributable basis. So in summary, we believe that the technical interventions in the plant gives us stability and predictability. We have eliminated the volatility on the recovery side. Then coupled with us being able to bring in a higher blend of ore, which will be sweetened by the Block 2 oxides, we believe that we have got a stable platform to -- for this mine to be operating at over 300,000 ounces a year attributable. And then that's going to bring just a commensurate drop in costs to that range that we would like to achieve below $1,100.
The next question we have is from Grant Sporre from Bloomberg Intelligence.
I just have 2 questions. The first one is around your -- around Tropicana. Your JV partner, Independence, is undergoing a strategic review around their holding. I'm just wondering what your thoughts are around that and have you considered buying out their stake? That would be the first question. And then the second one is just a quick one around Obuasi. It's obviously now into commercial production, and I'm guessing that's for Phase 1. Previously, you've mentioned that you may -- for Stage 2, there might also be a period of capitalizing? Or can we just expect it's now in commercial production, and that's the way we should think about it and model it going forward?
Thanks for that, Grant. I'll ask Ian to handle the commercial production. It sounds like it's -- you're trying to understand the accounting around that. I will deal with the Tropicana, the IGO marketing, the 30% stake. So I think just to preface it, we've had a very long relationship with IGO. They've been a good partner in the Tropicana assets. And Tropicana is a core asset to AngloGold, and certainly, we are investing and extending the life of Tropicana. And so, yes they -- IGO has decided to market their 30% stake. They went through a first round, which ended, I think it was around December -- towards the end of December. They're now in a second round process. I think importantly is that AngloGold does have a preemptive right over that 30% stake. And we've got to allow that process to follow its course, and we will assess our option to pursue it if it is value accretive for AngloGold.
I think importantly is we've got a range of opportunities within our portfolio. And so we'll always look -- it -- look at acquiring the 30% stake through a value lens, but also in terms of how it will rank up against other opportunities that we have in our portfolio as well. Thank you. Ian?
Thanks. And then if I can answer the question on Obuasi. You are correct, the Phase 1 commercial production was achieved beginning of Q4 of last year. And at that stage, all of those -- the capital spend on Phase 1 and we started to depreciate those values and obviously, recognized revenue on those production ounces. With regards to Phase 2, we continue to capitalize the growth capital spend on Phase 2. In Q4, there was the tie over of the plan to accelerate the throughput from 2,000 tonnes a day to 4,000 tonnes a day. And as Graham has explained, it now carries into the infrastructural development on the mine side, which is getting to a completion Q2 2021. And then the ramp-up is the one that we flagged before, where there's a bit of a tight schedule around that ramp up as a result of specialist skills on the ground. So we will look at continuing to capitalize the Phase 2 stage until we are comfortable that we've achieved a sufficient ramp up on the mining side to put that in full commercial production. I hope that answers the question.
The last question we have is from Leroy Mnguni from HSBC.
I've got 2 questions, please. The first one is, you've mentioned that your balance sheet can easily accommodate your 2 major growth projects. If sort of gold prices remain where they are and after 20% for dividends, you can fund your growth CapEx, and there's still cash remaining to the extent that you're fully de-geared, would you prefer to build up a cash buffer to fund your growth projects? Or would you rather pay a special dividend? And then my second question is, you've mentioned that the market doesn't fully appreciate the value in your portfolio. If that persists, do you then consider other avenues of maybe unlocking value for shareholders like M&A, for example, or maybe reconsidering your listing and your domicile?
Thanks, Leroy. I think definitely, we do remain alive to the competitiveness of our dividend policy. I think we have built up firepower in our balance sheet to execute on the growth strategy. Of course, we'd like to see a zero net debt scenario, but you've got to bear in mind that it's not static because we've got to fund these growth projects going forward. And we are a company -- as a management team, we actually don't knee-jerk. It's really about -- we'll see where we're at. It took us a while to update our dividend policy. I think as you can -- you know where we've come from. We've deleveraged the balance sheet and now we've positioned ourselves for growth. I think, certainly, we remain sensitive to what we're hearing in terms of more dividends, be it cash or special. Right now, special dividends are not on the table. We do prefer a more sustainable dividend policy going forward. And we'll continuously assess whether if we are competitive in that regard, taking the funding requirements and the state of our balance sheet into account.
I think just bear in mind, we've got a reinvestment strategy to improve our ore reserve confidence, extend the reserve line. And we've got the growth strategy. Our balance sheet is in a good state, and we'd like to maintain it in a solid state. And of course, we will continue to focus to improve returns to shareholders.
In terms of unlocking value, I think that is the focus of the management team. It is to focus on unlocking the latent value in our portfolio. Of course, the primary listing, like we said, it's not a near-term priority for us. We stated last year that COVID is still a real risk in our business and in the economy in which we operate in. However, a listing change, we'll continuously -- we will continue to review it, and we'll keep you posted in that regard. I think the focus of the management team really is to deliver on the priorities and the fundamentals that we've actually spoken to: extend the reserve life; deliver on our growth projects, both Obuasi and Colombia; address the free cash flow conversion challenges. And I think through all of that, we will be improving value for shareholders.
Thank you. Sir, do we have any questions on the webcast?
We do. I think we've got time for just a last question, bearing in mind that we'll be back again tomorrow to talk through everything in more detail. But the final question is from Mike Lawrenson from Laurium. And I'm just going to summarize the question, which is basically, given the 250,000 to 300,000 ounce uplift -- or pardon me, production guidance from Obuasi for this year that Graham spoke to, where are the drop-offs coming elsewhere in the portfolio? Could you just talk in through some of that detail?
So that's a good question. I think, specifically, you're focusing on 2021. And I think overall, the production for 2021 on continuing operations then is flat year-on-year. We see Australia steady. I think the drop-offs are really coming through Geita. Geita, as we said, it is a transition year because of the end of the large open pit, and we're transitioning in Geita Hill underground and Nyamulilima open pit. And I think in particular, Siguiri, we are expecting an increase to come through. So overall, the Continental Africa region with the -- what I've just said and the increased ounce ramp up from Obuasi is expected to be flat. And then Americas, the Americas region, in particular, is expected to be marginally lower due to Cerro Vanguardia. So hopefully, that does cover it for you.
Great. Thanks very much. Christine, a couple of closing remarks from you before we sign off.
Well, in closing, I'd like to thank everyone for dialing in today, and please remember to join us for our virtual Capital Markets Day tomorrow. The details are on our website. There will be just over 2 hours of presentations, and then you will have the opportunity to take a deep dive into the business journey from the drill bit to the operations and everything in between. And we certainly look forward to engaging with you again tomorrow. Thank you.