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Hello and welcome to today’s Centamin 2023 Interim Results Call. My name is Bailey and I will be the moderator for today's call. And after the speakers' prepared remarks, there will be a question-and-answer session. [Operator Instructions]
I would now like to pass the conference over to our host, Martin Horgan, CEO of Centamin. Martin, please go ahead.
Thank you, Bailey, and good morning, everybody, and thank you for taking the time on what is I know a busy day from a market news perspective to join us to discuss the first half interim results for Centamin. I have been joined by my colleague, Ross Jerrard, CFO; and Alex Barter-Carse, Corporate Comm. And we'll stick with the usual format where we'll take you through the first half of the year operationally. Ross will do a bit of a deeper dive into the numbers, and then we'll have a look at some of the major milestones we achieved during the year. And then, of course, we'll finish off with Q&A.
So moving on past the disclaimer, which I'm sure, as ever you've all read, and we will start off with the first slide of our portfolio. We are delighted that this slide has been updated recently. And for the first time now, on that slide, we are able to show a reserve number, but also in the company's history now includes reserves outside of Sukari. So delighted with that. That's a bit of a headline poster [ph], and I think starts to give confidence to our ability to diversify away from the Sukari and start to build that growth platform. So delighted now that 7.9 million ounces of proven probable reserves now includes Doropo project outside of Sukari.
Well, maybe spilling to the four boxes of our portfolio there. Sukari, really good first half performance, team did excellently. Guidance met in terms of production of ounces and obviously some great news on the cost base. Ross will walk through that a bit later in a bit more detail. Away from just the straight production numbers of Indi allowances [ph] and costs, projects moved forward nicely.
Paste plant was commissioned, dump leach finalized the first sale of construction, and of course, continue to develop the TSF #2 with raises 4, 5 and 6 moving forward. And also importantly for us, a continued movement towards compliance with the GISTM network -- sorry, framework for dealing with the tailings management as well. So a really good first half of the year at Sukari, delighted with that. It leads us on budget and on track for the guidance for the year. Second half of the year, plenty more to come. I'm looking forward to taking you around the grid connection opportunity and also that updated life mine plan.
Moving across to Doropo, delivered the PFS, very happy to get that out the door. I think a robust project, delighted with the work there. And we'll take you through that a little bit later on. And of course, we are able to continue also exploration [indiscernible] at the ABC project, with some work there looking at drilling some of the potential extends to mineralization, and that will allow us to assess those extensions. And our next phase of work will be to start looking at that from an economic perspective to see that is a viable project.
And at EDX finally, a couple of big step forward there. Most recently, last week, I'm delighted that after a period of sort of fairly sort of lengthy negotiation engagement that we managed to reach in principle terms with the Ministry of Petroleum around the model mining extraction agreement -- exploitation agreement for Egypt alongside those EDX projects alongside our industry partners, Barrick as well. So I think a big step forward for Centamin.
I think EDX a big step forward for Egypt in terms of modernization of the mining sector. And of course, in parallel with that, we did start drilling on our EDX projects, the Nugrus block around Sukari, and commenced the first RC program to test a go priority target there as well. So I think a really great slide, great progress across all four of those sort of elements of our portfolio. [Indiscernible] delighted that now we can include non-Sukari reserves for the first time in that proven probable reserve statements.
Next slide, please, Alex. So first half of the year, we published our first decarbonization road map. I'm delighted to say that we are targeting a 30% carbon abatement by 2030. I think three obvious pillars to our decarbonization strategy, closely, of course, is can we move to renewables and completely remove carbon from the power generation aspect of our operations? The alternate then, of course, is to swap higher carbon emissions diesel for lower carbon emission power sources, looking at that as an opportunity. And of course, the first [indiscernible] is to reduce our energy use to be more energy efficient effectively as well.
The other thing I'm really delighted about this decarbonization road map, a lot of people are publishing them. Lots of people are talking about sort of plans that they will implement of aspiration changes to come. But I'm delighted actually we've taken our first big step down. And as you know, in 2022, we commissioned our 36 megawatt DC solar plant, which have been up and running now. And actually Ross will take you through some of the stats, and how that's been performing over the first half of the year. But we've taken our first significant stride to do that. We are actually putting into practice our plans and starting to see the benefits of that both on the decarbonization and the cost basis.
But really, how do we build on that start, that great start that we've made? Well, in terms of renewables we are currently evaluating a solar expansion, can we basically get from 30 megawatt AC, which is the current sort of capacity of the solar plant, can we get that to 50 megawatt AC? And that would allow us effectively to run fully on solar during daylight hours. So it's technical evaluation and study work ongoing around that now.
The good connection, which I think we've signed posted a couple of times, can we connect to the Egyptian National Grid, where the Egyptian National Grid uses a combination of gas but also significant renewables. I think the target is to get to about 40% renewables within the grid by 2030. And therefore, that would obviously displace diesel as part of our makeup. And of course, energy efficiency, can we look at some of those strategies to basically be more efficient how we use energy around the site. And the combination of building on that, the current solar farm with an expansion with that grid, that gives us that interim target of 30%.
I think the nice thing, of course, as well is that, that 30% is a base number. We do see a number of other opportunities that we are currently looking to chase down, and can we actually beat that 30% target as well? So I think there's some interesting work to come there. And I think in terms of the solar expansion and the grid connection, we will be able to update you sort of further through the year as we go forward and look to build on that target of 30% that we are looking to [indiscernible] delivery as we go forward from there.
Next slide, please, Alex. Little scorecard here. Yes, really, really happy with that across the -- all three metrics there with production house and cash costs, where we wanted to be on ounces, and that's a nice 8% improvement year-on-year from where we were in the first half of last year. And that puts us as we look at the [indiscernible] as we can for the second half of the year, puts us bang in the middle of that guidance range. So I'm very happy with the production performance there, a really solid bit of work.
But in terms of the ASIC, just off the bottom end of the guidance, a 15% improvement year-on-year. And obviously, when we look at these things, some of the questions are, is that just down to sort of tailwinds or reducing of input commodity prices, input prices to us as there have been a little bit of that. But of course, there's also a number of operating efficiencies and strategies put in place driving that as well. And I think Ross will take you through the [indiscernible] and the cash costs in some detail during his session there.
We are pretty much happy to see sort of three green lights across all three of those boxes in line or better than planned, improvements on last year and tracking very nicely for the full year as well. So I think that's a really nice slide and a really good sort of testament to the work done by the team downside of this first half of the year.
But if we just step on to the next slide, what we can do here maybe is have a little look behind the numbers and how did [indiscernible] drive those numbers, how did we sort of able to deliver those performances over the first half of the year? So in terms of total material moved, relatively flat year-on-year, a sort of a 2% increase. When we look at that 56 million tonnes, that was about 44 million tonnes by ourselves and about 22 million tonnes by capital.
We still continue to see the benefit of that waste stripping program, that [indiscernible] program, continues to give us good and increased operational flexibility with the open pit. So I'm delighted with that. And the strip ratio for the first half is about 8.5%. And that in part was driven by the open pit ore tonnes mine as well. And so a decrease on the first half of last year by 20%, about 6.9 million tonnes.
I think it's important to note that, that particular outperformance on ore tonnes had a number of contributing factors to it. One of those was the ongoing conversion from waste to ore that we see as we go to a great control and we pick up and refine our geological models. But also, we've had a high number of oxide and transition tonnes coming through, obviously, which are free gig and easier to get through there. And they come as we bring the Sukari Hill down, that material will be placed on the dump leach eventually, but that also has contributed to the outperformance of open pit ore mines as well. So an excellent result there.
And obviously, a combination of those two things are a function of also better productivity. I would say that one of the nice little pickup that we've had as well for both of those first two boxes is around the performance of the [indiscernible] that we've been using. We are looking at a different product, looking to optimize some of our blasting efficiencies there, that has worked quite nicely and that has contributed to some of that productivity gain as well. So it's a really good performance in the open pit.
Underground, tracking nicely, tracking well. [Indiscernible] target for that sort of 950,000 to 1 million tonnes of ore from underground this year. I think a big improvement on the first half last year that was the transition from contractor to owner mining in the same period last year, but nice to see that 20% pickup half-on-half. I think the headline numbers are good, they say that we are tracking along. I think the story behind the underground, I think it's slightly more nuanced.
There is a global sort of shortage of labor, skilled labor generally across the market. And obviously, we haven't been immune to that. So the team has been sort of managing their sort of staffing rosters and have been able to sort of navigate through that. We continue to upgrade and replace the underground fleet as new equipment rolls in as well. So it's been a couple of headwinds there, but the team has navigated really well and maintained on track in terms of underground tonnes, say, for that full year total.
But I think what's behind those numbers is some of the work that's been going on. It's not obvious at apparent when you look at just the basic numbers of tonnes [indiscernible] and so on. A lot of work has been -- continued to be put into the underground in preparation to that sort of expansion to the full underground rate that we are going to publish later this year on a fully engineered basis. And there's a lot of work that doesn't show in those numbers.
And I think it's really important that the team didn't divert from that long-term planning process to sort of take a quick easy wins on the tonnes. They maintained the discipline around putting the groundwork in that will support that uplift as we go forward from the underground production rate. And it's a number of things that are not particularly noteworthy or exciting, but actually essential as we go forward. So for example, we've completely sort of updated the underground dewatering pump system.
Event grades continue -- event upgrades, I should say, continue. We are targeting sort of 450 to 500 [indiscernible], a level up from the current 320, and that should be done by October, November this year. We are pretty much doing the full electrical upgrade to the underground advancing the substations. We are working on a pit portal as well to come in and help that sort of infrastructure and sort of timing opportunity and generally around an expat reduction program and national promotion as well.
So I think when I look at that underground, on track for the year, a big improvement on last year and actually a lot of work behind the scenes studying that long-term vision that we can say in the land push that towards that sort of 1.3 million to 1.5 million tonnes per annum as we go forward as well. So delighted with that. In terms of all process, 6 million tonnes, a bit of a pickup on last year. Great to see again.
As we know, back in the first quarter, we did a bit of potential long-term maintenance that have been hanging out for a little while. We looked at the motor change out and some of the motor realignment. So even despite scheduling and factoring in that additional sort of work above and beyond the normal reline cycle, able to bring that increase in there as well. So I think that's some great work. So nice work to be done as we go forward as well. We can get some of the chances to further optimize the comminution circuit, looking at things like [indiscernible] software, which will help us to look at sort of throughput and bold feed and mill optimization as we go. [Indiscernible] pretty steady. Happy with that, no major change there, so that could run through.
And On the net recovery, again, a bit of a back story here that the 88.5% net recovery again in line year-on-year, a slight tweak from last year, which is expected with the prepay being largely, [indiscernible] shouldn't be too much of a change there. But I think what is really nice is what sits behind that 88.5% and I think we're seeing a number of sort of the projects and the investment strategies that we put in place over the last few years starting to come through.
Reagent mixing and dosing CapEx that we put through is [indiscernible] through there now, giving us better process control around use of existing reagents. We are looking at using new reagents and can we improve and optimize the process, and should, of course, be able to run in parallel that gravity circuit, which we hope to be able to finalize the design in the engineering of the second half of this year and built from there as well.
Ross, again, will take you through a little bit of the work there that we've been doing around the network and how that's flowed through to the bottom line in terms of cost base as well. So I think a really strong operation scorecard. Delighted with the headline metrics, all on track, moving forward or doing well. And I think behind those headline metrics as well some really nice good wins and really sort of good progress across a number of [indiscernible] both the mining and the processing side, leading to just direct to the bottom line as well.
And of course, moving on to the next slide around safety. I'm delighted to say that continue to deliver that performance in a safe manner. Obviously, we have the 1 LTI in Q1 this year. Delighted to say no LTIs in the second quarter, and a real sort of refocus and doubling down by management to really sort of reinforce the commitment to being a safe site. I think I said before that I believe the safe site is a proxy for good management.
I'm delighted to see that there's a continued performance into Q2 as well. So in terms of trending towards our internal targets, on track this year to meet those internal targets. But of course, the real focus is to strive for that 0 harm workplace as well. But [indiscernible], yes, delighted to say a clean and good safe Q2, rounding out the half, leading to some high line what is an increasingly safe and professional workplace as well.
With that quick run through the operational side, I would like to now hand over to Ross. He will take you through a bit of a deeper dive of the numbers over the first half of this year. And then Ross, will have a little bit of Doropo on the EDX work as well. So over to you Ross, and thanks very much.
Thank you, Martin, and good morning, everyone. I'm pleased to report material movements across most of our key financial metrics after a really solid first half performance by the Ops teams. As you can see on this scorecard, revenue is up 11% year-on-year, driven by more ounces sold at an increased average realized gold price. An EBITDA margin of 45% delivered -- represents a 13% increase year-on-year driven by those ounces in gold price, but also lower costs, particularly fuel, which averaged $0.77 a liter for the half.
Post-tax profit to shareholders of $91 million was up 7% year-on-year. And this was driven by the catch up of outstanding cost recovery, which is a pleasing result to now be up-to-date on distributions. The cost savings program is now at $143 million of the cumulative $150 million target, with further opportunities identified that will continue to drive sustainable savings. Driven by the good performance, we finished the half with liquidity of $311 million, which includes $150 million of undrawn RCF facility.
This overall good performance across the period resulted in a 7% increase in basic EPS. The strength of the results for this period, and over a period of elevated capital investment, is testament to our prudent long-term approach to capital allocation and cost management, and reiterates our robust financial strategy of maintaining a strong balance sheet, our stringent cost management, disciplined capital allocation with a focus of maximizing free cash flow generation.
The first half of 2023 delivered strong operating cash flows of $172 million. This is the highest in the last 5 [indiscernible]. We generated positive free cash flow of $19 million after Sukari profit share distributions of $46 million to our Egyptian partner, EMRA, and $46 million to ourselves. We were also able to distribute that offsetting cost recovery that failed due during the period the result was that we closed June 2023 with cash and liquid assets of $161 million, comprised on the left hand side of the slide chart with cash and equivalents of $96 million, 40,000 ounces of bullion on hand, which is waiting to be shipped, which was valued at $28 million, gold and silver sales debtors of $34 million and derivative instruments valued at $3 million.
With this strong half year results and cash flows generated, we’ve been able to fund the investments and cash flows and the RCF remains undrawn. So from an overall liquidity standpoint, $150 million sustainability linked RTF, represented in gray, remains available and provides a total liquidity pool of $311 million to work with. We also commenced the gold price protection program, which supports the remainder of 2023 and the first half of 2024 cash flows, providing more certainty and further balance sheet flexibility.
Let me talk to that in a bit more detail. As you can see on this slide, gold has been trading below $1,900 an ounce for 27 of the last 36 months. Or put very simply, gold has been below $1,900 an ounce to 75% over the last 2 years. To safeguard revenues during a period of increased investment, Centamin purchased put options for 240,000 ounces of gold at a strike price of $1,900 per ounce. The put options mature at a rate of 20,000 ounces per month for 12 months from July 23 to June 24.
This is a cash-settled program, not involving physical gold delivery and was done across two tranches where we were able to take advantage and lock in attractive pricing for these put options for a total premium paid of $6 million, which represents an average cost of approximately $25 per ounce, and it was all funded from the group's cash position. The program provides the company protection should the average monthly gold price fall below $1,900 strike price, while allowing us to retain full exposure to any upside in the gold price above this level.
Importantly, this program aligns with the period of elevated capital investment at Sukari and provides us further financial flexibility and certainty to pursue the company's strategy of delivering both the returns to shareholders. I note we do not hedge a count for this transaction, and it's simply booked as the financial instruments in their accounts.
Globally, cost inflation remains high, and central banks continue to tighten monetary policy. Our judicious approach to forecasting and stringent cost management has allowed us to deliver costs within our guidance both last year, and we remain on track to meet our 2023 guidance.
Slide 12 shows the breakdown of costs. Both mine production costs and costs in absolute U.S. dollar terms where pleasingly, you can see the downward trajectory of costs for the first half of 2023 versus prior period. The mine production costs split by cost center is the top right hand pie chart, which shows the majority of the cost pools spent on processing.
This is always our largest cost component. And in the first half, it formed 45% of the cost pool totaling some $85 million, which has decreased by 11% compared to the first half of 2022 due to the decrease in fuel costs due to solar savings and fuel prices as well as reductions in consumable costs like reagents.
The next largest component is the open pit costs, forming 38% of our total cost pool, some $72 million, and has increased compared to the first half of '22 by 17%. This is due to a 1 million tonne increase in the volumes mined, offset by the $0.04 lower average fuel price.
Finance and administration costs are also 20% lower year-on-year at $18 million due to the Egyptian pound devaluation, affected on catering costs, salaries and wages, freight and customs costs. The blue bar on the bottom right -- bottom left quadrant charts of the cash cost of production in the first half of 2023, which was $187 million, a 1% improvement year-on-year and below our internal forecast. This is primarily due to that lower fuel price and lower fuel consumption due to the integration of solar and also our focus on operational efficiency gains. It was partially offset by a 2% year-on-year increase in total material mine.
The unit cash cost of production on the right hand lower quadrant show $849 an ounce produced for the first half of 2023, a 9% improvement year-on-year, driven by higher production volumes.
Similarly, the red, or red brick color shows our all-in sustaining costs for the first half of 2023, a total of $269 million, which is an 8% improvement year-on-year, reflecting lower sustaining CapEx in the period, offset by increased corporate costs due to nonrecurring legal fees associated with the debt facility and the gold protection program. Our unit all-in sustaining costs, again, shown at the bottom right of the chart, at $1,228 an ounce sold is a 15% improvement year-on-year, driven by those higher sales volumes.
We have been updating you regularly on the cost savings program. And as I mentioned, good progress continues to be made on a multiyear cost savings program with a cumulative $143 million delivered of our $150 million target to be delivered by the end of 2023. This continuous improvement program is all about controlling what we could, whilst reducing exposure to external drivers. These initiatives identified our credit to the teams in terms of conversion from opportunity to implementation. But importantly, the investments we’ve made are now starting to make an impact on our costs as seen trending on these graphs.
I've always spoken on the processing plant as being our single biggest cost center. Now with the introduction of the solar project as well as other targeted savings initiatives, there are meaningful savings being delivered. The top half on the left shows our consumable savings, where line costs are down due to improved line activity that we are able to use less.
Oxygen costs were down due to the oxygen system updates to maximize the pre-oxidation kinetics, the leach kinetics, and copper sulfate was down due to the guideline flotation reagent optimization after fully commissioning and upgrading the new reagent area dosing system. This includes [indiscernible] work and online measurements for operational parameters to change that dosing strategy for the copper sulfate, three clear examples of project initiatives delivering value.
The impact of the Egyptian pound devaluation against the U.S. dollar is shown on the bottom left chart, where we’ve benefited in U.S. dollar terms because of the devaluation, notwithstanding local inflationary increases. You can see the monthly averages indicated by the dotted lines. Our most exciting and biggest impact has been the diesel consumption dropping with the solar project and fleet optimization.
Year-on-year, you can see the reduction in the top right bar chart of the diesel usage in millions of liters. Whilst we’ve had the benefit of reduced diesel usage, we have also seen the reduction in diesel prices, which is down from the 2022 peaks.
Talking a bit more about our solar plant, you can see the performance and payback is meeting our expectations. We’ve seen savings of up to 100,000 meters of diesel fuel a day during the peak sunlight months, with average savings year-to-date in line with our target of 18 million to 22 million liters this year.
The 100,000 liters per day metric is fantastic, but it is comparing when the diesel engines are least efficient versus when solar is performing well and the diesel engines are derated. On an average, across the year, we are saving 55,000 to 60,000 liters a day, or approximately $1.3 million per month at the average fuel prices year-to-date, a fantastic result and meaning further solar expansion is warranted.
Talking a bit more about currency. You can see that we are largely a U.S. dollar exposed business and the U.S. dollar denominated business. Giving a bit more detail on the group exposure, you can see that EGP component is down 5% from some 33% in the first half of '22 versus 29% in the first half of '23. The composition of that 29% is mostly fueled at 67% and labor 13%, as you can see on that pie chart.
So whilst we’ve seen an almost halving of the Egyptian pound over the last 12 months, we are equally conscious of the high local inflationary environment that we are seeing in the domestic market. Now at a 5-year high of almost 40%, for us, as the business operating largely in U.S. dollars, this has not had a material impact, but we do remain vigilant with both monitoring and managing this cost base.
This year is a period of significant reinvestment with an elevated level of gross CapEx of $273 million budgeted for 2023. This included $48 million of sustaining capitalized deferred stripping. As a number of studies and multiyear projects move towards completion, we expect the CapEx to reduce from 2024 and beyond. These projects underpin our confidence in the long-term potential of Sukari.
The first half of 2023, gross capital expenditure was $108 million, including commissioning the underground paste-fill plant, the continued contracted waste stripping program, new underground equipment purchases, underground development, open pit rebuilds and construction of the north dump leach facility.
Total sustaining CapEx was $50 million of that $108 million, including $10 million on deferred stripping and non-sustaining was $58 million, of which $44 million represents that capital waste stripping program. We had expected a higher CapEx spend in H1, but due to minor changes in scheduling, this has been moved into the second half, and we remain on track to meet our 2023 guidance.
In terms of our capital -- key capital projects that accelerated waste stripping program is now 70% complete, solar expansion studies are underway, Doropo DFS is underway, the grid tender proposals have been received and are under review. We have commenced our EDX drilling and the gravity circuit is being advanced. So all projects remain on track.
I'm delighted to talk to our commitment to shareholder returns, and this will be our tenth consecutive year of dividend distribution. Centamin has strengthened its dividend policy, which is to continue to use group free cash flow generated and applying a 30% minimum priority payment of dividends from those cash flows, but calculated before growth project, which is funded by debt and surplus cash flows. Thereafter, any surplus cash flows would be reassessed against both balance sheet requirements and the application of further shareholder returns.
The Board decided to distribute a total of 53% of first half 2023 group free cash flow before treasury funded growth CapEx, which is to be distributed to shareholders on the 29th of September. This decision was considered together with the fact that Centamin continues in a financially robust position with $161 million worth of cash and liquid assets, still having the $150 million RCF facility undrawn as a result of the first half growth CapEx being funded from cash flows. Securing the gold price protection program for 12 months from July 2023 now limits the revenue downside risk below $1,900 per ounce, and operationally and financially being well-positioned for a stronger second half, which is in line with plan.
So consistent with the company's stated commitment to returns, the Board declares an interim dividend of US$0.02 per share or $23 million for the period ended 30th of June 2023. The steps taken against that dividend policy are shown on the right hand side of the slide. So by taking group free cash flow of $19 million, adding back the growth projects, that CapEx funded from treasury of $21 million and taking off the 30% minimum dividend distribution per policy, results in a surplus cash flow for discretionary capital allocation of some $28 million.
The Board supplemented that interim dividend by adding back the $10.8 million, giving a total dividend declared of $23 million. So in summary, following Board discussions, the minimum 30% of free cash flow was calculated and then a third of the surplus cash flow available rounded up to US$0.02 per share was taken as part of the dividend declared.
We have maintained a robust financial strategy and continue to deliver continued improvements. We finished the half with a strong balance sheet, with liquidity of over $300 million, allowing pure exposure to gold price and also after funding CapEx from treasury. Our balance sheet position now across both cash and RCF allows additional flexibility, and now our complemented with the gold price protection program provides further certainty over the next year which enables us to remain fully focused on managing the bottom line of the business to drive margins and generate free cash.
We’ve continued to deliver on our cost savings initiatives and are on target for that $150 million with more to come. And we’ve delivered on our key projects on budget and on schedule. Our treasury and strong cash flows even during the reinvestment phase [indiscernible] financed our project, paid our [indiscernible], and continue to deliver shareholder returns. So in summary, I think it's been a really strong delivery against our stated plans, and we’ve continued to build on that track record of delivering results.
With that, I'll hand back to Martin.
Thank you very much, Ross. It helps and I take myself off mute when talking to you. So look, very much appreciate it, Ross. I think as you say, an excellent first half in terms of stringent cost control and those optimizations coming through. I'm delighted to see that really starting to put Sukari back where we know and think it should be.
And really, of course, we talked about Sukari as a platform on which to build a multi-asset business and really Sukari is that engine of the business and whether that growth come and how do we fund that growth? And I think those are sort of the strategy that we are employing there around cost control at Sukari, but also a resilient and robust sort of balance sheet but able to do that. And of course, during the first half of this year, we were able to deliver the PFS of Doropo. And we would like to do now and then we took a little bit of a deeper dive into Doropo as well.
So moving on to the slide there just as a location map. Just a bit of a recap as to where to post [ph] it. So as you can see, the Doropo, the group license its in the Northeast of the country. ABC is over on the west side there. And of course, I think two things to note really, I think, around that [indiscernible] things. One is that proximity to the Burkina border. It is in sort of the other project sits adjacent to that.
And to the south of the project area is the Comoe National Park as well. But I think importantly is that the project site is at a good number. Its [indiscernible] from the border, and I think at the nearest point, we saw some 10 kilometers from the park as well, but that's where it sits geographically.
And I think obviously, the PFS was delayed slightly compared to where we had anticipated getting it out. And as I think we signaled previously that was around the decision to try and chase down those metallurgical opportunities that we've identified as part of the PFS work, which allows us to simplify the flow sheet. So a slight delay to that, but delighted that they actually did flow through.
So when we look at the sort of transition from the PEA that we did into the PFS, we've seen the sort of resource work set up really nicely from a geological perspective. The infill program has been confirmation to actually increase the grade of the project, and we saw those metallurgical improvements from the PEA with that simplification of the flow sheet.
Of course, offset against that was those inflationary pressures that the whole sector has seen. And really, of course, when you sort of balance all those things out there and taking the project forward, I still believe that we’ve a very robust project with a great outcome for Doropo as well.
So moving on to the next slide. So in terms of the project itself, I think my sort of categorization of the project is that as far as I’m concerned, it's relatively technically simple. It's not a particularly challenging project from a technical perspective. The secret of making Doropo work is going to be around that social engagement and getting that sort of that license to operate in this part of Côte d'Ivoire.
So from a technical perspective, geologically speaking, it's eight separate resource sort of pit, if you like, or ore bodies, all with broadly similar geological settings with shallow dipping structures that we are targeting. They're mined through a conventional open pit configuration using trucking shovels. It's a pretty moderate like-for-like strip ratio about 4.1x sort of strip ratio. And for the PFS, we did assume that contract mining would be the method to be employed as well.
Processing wise, standard SABC [ph] circuit on the comminution side and into a CIL, it's $3 million. It's on refractory gold and the comminution circuit average is 4.4 million tonnes per annum, but that varies between 4 million tonnes running entirely on fresh material and up to about $5.4 million in terms of rolling [ph] oxide transition material. And the grind side there is if we are at the fresh material down to the 75 micron, and we are at the oxide and transition [indiscernible] to 106. And running all out, that gives us the right to mine gold recovery across the project of about 92% as well.
Infrastructure wise, tailings, fully lined facility, designed to ANCOLD and will be operated in line with GISTM and downstream construction methodology for the embankment construction and raises. And from infrastructure perspective, looking to hook into the National Grid system. It's about 55 kilometers from the Bouna substation and looking to bring on from there as well.
So I think from a technical perspective, shallow pits, maximum pit depth about 130 meters, most picked average about 80 to 90 meters, simple trucking shovel into a very standard comminution flow sheet into a CIL. Good north of 90% recoveries at standard grind sizes and a pretty standard configuration around the infrastructure curtailing and the grid connection as well. So I don't see it as a particularly sort of technically challenging project. And one of the things we've worked at hard there is infrastructure layout, looking to optimize that within the overall concessions as we sit there.
Maybe moving on to the next slide, please, Alex. I think the key, obviously, around Doropo is going to be the environmental and social assessment and setting of the project. I think it's been my sort of personal experience, whether I was in banking and consulting a number of years ago now and the more recently at Toro [ph] before joining Centamin is that, generally, in my view, you can't have too much environmental and social information and you can't have it too early in the process. I think that's never really a [indiscernible] project.
And I think sort of one of my sort of big takeaways since the working in [indiscernible] number of years now is that if you get that environment and social data early, it allows us for a better project outcome. You can assess that as you're doing a prefeasibility, fewer surprises, you can be more sort of considerate around those inputs, not just focus on the technical, and that leads you to a more robust investment decision down the track as well.
And I think we've very much applied that approach here at Doropo. So in terms of the sort of PFS work, we pretty much did a full, if you like, ESIA baseline review work for both environmental and social to PFS standards in parallel with the technical work. We used both internationally sort of experienced groups like Earth Systems, supported by local experts H&B Consulting as well. And I think that baseline work is proven valuable as we think about sort of project sort of configuration and the project development.
I think the major sort of headlines coming out of that baseline summary. So we are sitting in a rural area. It is multi community and different -- the different ethnic groupings within the project footprint. And we see a mosaic of different land uses within there as well as there's cash dropping [indiscernible] sort of grading with animals, and there is an element of [indiscernible] working in the area as well. It's a fairly rural part of Cote d'Ivoire relatively underdeveloped, and as you'd expect in that role setting a number of different land uses across the project footprints.
We think that over the full life cycle of the project construction and operation, up to 3,000 people could potentially be impacted. That's not to say we have to move 3,000 people, but 3,000 people within the area could be impacted. There will be some resettlement, some land take and [indiscernible] restoration. And we think that within that sort of print as well, about up to 10,000 hectares of land take is required, again, over the course of the project.
And as I mentioned earlier, the other thing to note is that to the south of the project area is the Comoe National Park as well. I think it's important to note that the project as envisaged, as designed fit entirely out of the park and out of its buffer zone, but it is adjacent to that. And we are aware that it is obviously an environmentally sensitive receptor, and we have considered that as part of our sort of project evaluation. So really understanding that baseline summary has allowed us to basically look at the various scenarios that we can do as part of the PFS work.
I think one of some of the main considerations that have influenced the project design as part of our ESIA, well, clearly, the first and foremost is to make sure that we try and where possible avoid or minimize [indiscernible] impact. That's obviously an easy and early win for us. And how that's manifested itself is that effectively, we have a -- if you like, a staged approach to both project development and then subsequent operation.
And what that really comes down to is the idea of a starter project, where we can build the project infrastructure, plant site, accommodation and so on. And the initial 2 to 3 years of mining production actually sits within a single relatively small starter of project area, and that has only engagement with one local community. So it's not like we’ve to basically deal with all of those users across the entire project sites to get up and running.
We actually can deal with one community grouping that will allow us to get the project infrastructure built, and allow us to get the first 2 to 3 years of production under our belt before we have to start engaging with subsequent sort of community groups within the project area as well. So I think looking to sort of combine that sort of placing an infrastructure away from communities, and then staging that design, I think, has allowed us to simplify the upfront development sort of approach before we then sort of get into subsequent phases of operation.
I think the other thing we thought about the mining sequence. Clearly, you could let the sort of the software room while then it would sort of be pulling tonnes from all the different pits at different times to try to maximize the NPV. We've not gone down that route. What we'd look to do again is sort of sequence the mining pit operation. We've constrained the schedule to make sure that at any one time, there are only two pits open, and we look to progressively rehabilitate as we close down pits and move the next onto there as well.
And I think the final point really is that sort of community engagement, getting that social license to operate is going to be critical and designing a very detailed and thorough wrap in light of the restoration program and starting that engagement early is really going to be the key to making Doropo work, and that's something that we are starting in the second half of this year as well.
So I think in terms of the overall project setting, as I say, technically simple, the art of this will be sort of putting the project within this sort of the [indiscernible] within in the Northeast Cote d'Ivoire. But identification of those issues early sort of factoring those into the plans and a staged approach to engaging with community as we go forward and an early start to that work is going to be key. So I'm pretty happy with that.
There are some challenges, of course, as with any project, but I think something that we believe that we have the skills and the experience to deal with. And I think importantly, something that's already -- these types of programs have already been successfully completed by other companies within Cote d'Ivoire as well. So there's a level of sophistication and understanding within the country, both in the administration and from the community side about how these things work as well.
Just moving on to the next slide. So when we pull together that configuration, when we brought together our staged approach of development and mining, where does that leave us? Well, look, as I say, delighted that the resources held quite nicely on the drill out to the PFS stage, and that led to a contained reserve of about 1.9 million ounces, just a shade under 1.5 grams a tonne. That leads us to an average ore production of about 173,000 ounces per year over a 10-year life, but we do average around 110,000 ounces per annum in the first 5 years. Again, that gives us a life of mine all-in sustaining of just over 1,000 in that first 5 years, just below 1,000 as well. So sitting quite nicely.
And when we look at the CapEx for construction, that's just a shade under 350 million, and that includes the 10% contingency as well. I think that's sort of when we looked at that as a company, and we look to that against our own internal hurdle rates of IRR, NPV, project life and the production profile is that we think that’s [indiscernible] really nicely.
And if we do that at a long-term selling more conservative price of $1,600 or we use a sort of current levels around $1,900, we see a project that certainly hit those NPV IRR targets as anticipated. And that, as I say, a sensible level of gold price and deeper price assumptions that move forward as well. So I think that gave us the confidence effectively to take the project forward.
Next slide, please, Alex. In terms of assessing the sort of the CapEx and OpEx base, clearly, we've taken a bottom up approach on first principles. And of course, we have a fair amount of experience now in the Centamin Group of West African gold project construction and development, our project [indiscernible]. This would be the 5th project of the construction and development of gold projects in West Africa.
[Indiscernible] Toro successfully led the feasibility and then the construction of that project, which had a Stage 1 under budget as well. So we think we've got quite a bit of in-house experience. We've used high-quality consultants and engineers to do the work, and we came up with the project economics that we just discussed.
One of the things we wanted to do, of course, that was to make sure that we are sort of cognizant of inflation, cognizant of where the project -- the market is moving, where does the Doropo sit? I think what we were quite pleased to see that having taken the sort of bottom up approach and derive the CapEx and OpEx numbers, and then when we [indiscernible] to industry, we were pretty happy that actually where we've come out is a project that sits kind of mid range on the capital intensity.
So we're certainly not the cheapest, as you'd expect in a remote location, but also pleased to see that we are not at the top end and it sits rather nicely kind of middle of the pack in terms of that sort of capital construction cost intensity as well. So I think that gave us additional comfort that we're in the right ballpark of the project at this scale.
And when we look at the all-in sustaining costs, again, again, we believe that the project will screen quite nicely and sit the right side of the [indiscernible] $0.50 for the cost curve as well. I think that was a good validation and a good sort of sense check for us to make sure that when we did the work that we are not kidding ourselves and there is something that's real here, and it is in line with the industry sort of benchmarks at this stage.
Just moving on to the next slide. So I think with that sort of confidence in the project, sort of economics and the potential sort of scale and viability of the project, with that sort of benchmarking to industry, we've pretty much stride [ph] into the feasibility in ESIA process as well. So one of the good point is that we've actually pretty much completed the drilling for the -- the feasibility stage already. We've taken advantage of the current dry season that's just coming to an end in West Africa now, and pretty much we have completed all the resource drill out required to support feasibility as well. So that really just leaves metallurgical test work tweaks and then the actual study work to be done over the balance of this year into early next.
And really what we [indiscernible] DFS? I guess, philosophically, we think about the PFS as being sort of project evaluation. So what are the alternative configurations of project infrastructure layout, what are the different sort of configurations of processing metallurgical [indiscernible] TSF sort of opportunities? And really the TSF to our mind then is trying to find the preferred configuration for the project. And then the DFS stage is about then optimizing that PFS design. So that's very much the approach that we've taken. And that does lead to believe that there's a number of opportunities now that we can refine to the DFS stage to enhance the project from there. And these are our identified real opportunities that are being able to lay it in right now.
On the resource base, we know there's some good upgrades to come. We did include some certain oxide material as part of the PFS. We just didn't have enough test work at the time, and they are sort of shallow, good grade, high recovery ounces. They will come into the DFS as well, like to see those coming through. We've been able to drill off some known extensions to current resource sort of targets and pits, so these are extensions to existing sort of pits that will come in, and we've had some nice work on the we will update you later in the year on.
And also, we've identified a number of new areas within the broader [ph] concession area from [indiscernible] done some drilling, and there's a good chance that some of those resources might come in. They're likely to sort of extend the life of the project more than sort of add on [indiscernible] at this stage. But certainly, we see quite a bit of resource upside that can be sort of factored into that feasibility work.
Operational cost savings, we still think there's a number of things on the table that we can sharpen up, reagent consumption and optimization, moving to an owner's team on the mining rather the contractor. Obviously, we've got a lot of skills and experience in Sukari that we could bring across. And we do think there's an opportunity there to sharpen up some of the cost base.
And I would say the same with the construction capital costs as well, thinking about construction philosophy and moving away from an EPC [indiscernible], warehousing some of the [indiscernible] within our owners team, obviously transferring some of that execution risk to ourselves, but obviously lowering the cost as well. And then also looking at how quickly could we sort of sort of front run some of the longer lead items, how much of the financial risk are we prepared to take for shorten the construction plan as well and we take some of the costs out of that as well.
And I think really when we put all those things together, what I'd really like to say, of course, is that first 5 years of production all sitting above 200,000 ounces a year. So that would mean some of those ounces coming through backfilling years 3, 4 and 5, getting us to that at least 200,000 ounce mark for the first 5 years, and seeing what happens thereafter as well. So I think there's a number of nice opportunities that will flow through that will capture a part of DFS and look to improve on those already sort of pretty robust NPV and IRR targets as well.
So in terms of the next slide, where do we go from here? We've got a pretty detailed plan laid out now is to get the ESIA finished by sort of year-end broadly. And then for a mining license application by the middle of next year, that is our sort of target from a procedural basis with government. We actually met the Minister of Mines [indiscernible] a couple of weeks back. He was very supportive of the Doropo project. It is a rural relatively underdeveloped part of Cote d'Ivoire, and the government is very keen to see investment in this part of the world, infrastructure development, job creation skills and so on. And he did indicate that this was a priority project for them as well. So delighted to get that sort of in-country support for the project as well.
So really, on the assumption that we can get our applications in by the middle of next year, we then go as a government review process, and then we get into the FID before then sort of approximately plus/minus sort of 2-year build at first gold process as well. I do think there's quite a bit of opportunity to sharpen up that pipeline, and that's something we'll look at during the feasibility stage now and look to see where we can sort of shorten that up and bring that into effectively as well.
So I think in summary, slightly delayed, but ultimately a very good result, a robust project that streams well against its peers. We think we are on the right track there. A number of identified opportunities that we can now layer into the DFS, and the team is capable of delivering it as well. So I think that's a great bit of work for us to complete it there, and we are still at full [indiscernible] pushing on the -- ESIA as we speak.
And if that wasn't enough, just moving on to EDX, our Eastern Desert Exploration work in Egypt. And a picture there of myself to say the camera adds 10 pounds, it was more like [indiscernible] to be there. I have to get to the gym before I heard from a holiday looking at that picture. But delighted that last year -- sorry, last week, apologies, we were able to agree the framework around the NMEA for Egypt. For what has been a fairly sort of lengthy detailed engagement process, delighted that ourselves and our entry partners Barrick were able to meet the Minister of Petroleum.
The gentleman in the middle there is Excellency Engineer Tarek El Molla, and finalize the in principle terms to support a exploitation sort of agreement for new projects in Egypt going forward. And I think it's a great step forward for us at Centamin. We like it now and we've got clarity around our new EDX blocks from an exploitation terms basis.
We are delighted now that the likes of Barrick are sufficiently comfortable with the framework agreements that they are prepared to mix the country as well. I think it's a real step forward to Egypt now to generally put itself on a map as an exploration of potential development jurisdiction on a global basis as well. A lot of the red new being shield there, with an emerging jurisdictions we know like Saudi and other places. And now what we believe is a modern code has been effectively agreed.
In terms of the process itself, ourselves and Barrick, we've kind of [indiscernible] the industry group. We were supported by [indiscernible], a highly experienced legal firm. And I think one of the key roles is played by Wood Mackenzie, who acted as almost a buffer between the industry group and the minister looking to ensure that this is sort of the economic argument of discussions around the regulatory framework were sort of like unpaid or provide an independent point of view as well. So I think it was a good process. I think it was sort of supported by a really sort of leading panel of industry experts.
And really what we've come up with this concept of a kind of a win-win, which is kind of a bit of a key shape. But generally, one of the things that we discussed right of the process is to see this kind of sharing of risk but also reward on a sort of 50-50 basis between the state and industry. And I think that's where Wood Mackenzie were very useful to be able to source it down with the ministerial team and look at the various sort of options and levers they could pull to make sure that there was a balance of this sort of win-win between industry and state as well. And I think we pretty much got there on a life cycle basis as well with that kind of 50-50 approach to that.
I think interestingly, the Minister very much understood. But international mine companies can choose within reasons to be in certain jurisdictions. And therefore, Egypt was effectively competing with other international countries for that foreign direct investment from mining companies, and he understood that model as well. And I think that sort of where Egypt has ended up on this [indiscernible] in terms of commercial terms is that it's probably screened very, very similar to something like Côte d'Ivoire as well.
So now we've got the Arabian-Nubian Shield in Egypt. We've got this wonderful infrastructure of roads and power and people, which are obviously very familiar with of Centamin. We've got a pro mining -- sorry, Minister and government that wants to find direct investment, and we've got a regulatory and fiscal regime that is clear and concise and also is on a part of something like Cote d'Ivoire as well. So I think that is a real win for Egypt. Process from here is that, that sort of agreement now will effectively go through a three step ratification process, as we put the normal sort of process in Egypt. Government is on some reset now to August and September. So we anticipate when everyone's back at their desks.
Through October, November, that will be ratified and brought into [indiscernible]. So I think an excellent piece of work. A long process committed at times. I'd like to comment that with Centamin team for their perseverance over an extended period like to shake hands [indiscernible] last week and alongside [indiscernible] Barrick to get to that point as well. So I think that's great news for Egypt, for Centamin as well.
Moving on to next slide. So with that sort of framework, we did start work at our exploration ground earlier. We didn't wait for this. We had confidence that we would get there. So as you know, we did start work on our EDX ground, predominantly the Nugrus block, which sits adjacent to the Sukari concession agreement.
And we generated over the last sort of 12 months up to 7 drill targets through a combination of soil mapping and so on. I'm delighted to say that during the first half of this year, we rolled the first rig, RC rig onto that first target and have commenced drilling on a 10,000 meter program across EDX. We are about 3,000 meters into that program now. And over the next 2 or 3 months, as we move across these targets, we will finish that initial scale drilling and look to update from there as well.
So delighted that we've got those fiscal terms and regulatory terms in place now and actually sort of quite excited to have a rig on the ground and actively drilling those first targets that's all sit within a trucking distance within Sukari as well. So looking forward to updating you over the balance of this year as those results start to come in as well. So exciting times in Egypt, very, very happy with that.
So maybe moving on to the summary. In terms of our clear and consistent strategy, I think this is a familiar slide that those have been on these webcasts before. Look, I think, Sukari, obviously in terms of the sort of value maximization, life of mine plans to come through second half of this year. And of course, we will continue to push on with group power performs part of that and sort of further growth opportunities around resource reserves and further cost optimization as well. So I think they're the life of mine is the headline. There's still lots of initiatives to come through there.
In terms of growth and diversification, as we've talked about, Doropo steering [ph] nicely, full [indiscernible] with the DFS now and of course, these EDX results that will hopefully be coming through later this year and exploration. It's early stage. It's high risk, but excited about that. And of course, our commitment to shareholder returns. Ross sort of articulated our sort of capital allocation structure earlier this year.
We've put that into practice now this year this interim dividend at this stage, and look to continue to stay committed to stakeholder returns as we go forward as well. So just, yes, delighted, really strong first half of the year, sets up very nicely for the second half of the year at Sukari, and also Sukari set with that foundation to continue to deliver sort of growth and diversification to the portfolio.
So on that basis, I'll pause there and would now be happy to throw the call open to questions, and I'll hand back to Bailey, who will run through that on that process as well.
Thank you. [Operator Instructions] Our first question today comes from the line of Marina Calero from RBC Capital Markets. Please go ahead, Marina. Your line is now open.
Good morning, and thanks for the call. I have a quick question about your growth strategy. Now that your Doropo project is moving into the BFS stage, would you be open to expand your footprint in West Africa via M&A?
Hi, Marina. Yes, look, absolutely. So certainly, from a -- well, if we sort of look at West Africa, absolutely, look, we've got ABC in Cote d'Ivoire. We think Cote d'Ivoire remains a really interesting place geologically and obviously, with an established sector. I would say that from an exploration basis that sort of early-stage exploration work, we are currently assessing a number of opportunities right across West Africa. And we look to add in that sort of early stage direct application or JV with [indiscernible] to continue to sort of grow out the exploration sort of sector as well.
I think if we move sort of further up the curve towards development, pre-development opportunities, yes, look, absolutely. I think we'd have to think about sequencing. I think it's probably difficult to try and build two projects concurrently. I think that would be a bit of a challenge. So if we're looking at development opportunities, we'd have to see how they sort of integrated into our development pipeline and how that would fit. Is it something that would come before the Doropo and therefore, we can accelerate on that basis. Or is it something that would then sort of naturally sort of finish or be ready to be constructed post Doropo construction as well. So you kind of roll your design and construction team from one to the other as well.
So certainly, I would say that exploration portfolio perspective very active and looking at other things right now. If we're moving more towards a development opportunity, we'd have to think about how that fitted in the sort of time line around the Doropo. And if it was a producing opportunity, why not look absolutely. We are keen to sort of try and diversify the asset base, as you know. Organically, we've got a good pipeline, but we remain sort of, if you like, opportunistic looking at some of those M&A opportunities if you can find the right value to the right project in the right jurisdiction. But absolutely, I think we could consider that.
Okay. That’s all I have. Thank you very much.
Thanks.
Thank you. The next question today comes from the line of Daniel Major from UBS. Please go ahead, Daniel. Your line is now open. Please do ensure that you’ve unmuted locally.
Sorry about that. Hi and thanks for the questions. First question, sorry if I missed it somewhere in the statements. What is the cost of the production that you put in place for the next 12 months?
Ross, do you want to take this one?
Yes, [Indiscernible]. Hi, Dan. So the total cost of the put options was US$6.1 million. That's across the full suite through to June next year. In the financials, you'll see two tranches. So there was a first tranche of $2.5 million that we entered into on 14th of June, and the second tranche was post June, July, there's a 3.6, at the subsequent event. The total number of US$6.1 million.
Great. Thanks. Second question, just on CapEx and could you [indiscernible] CapEx in full basis in your summary rather than the adjusted number. But what's some -- can you give us a sense of where we should be thinking, even if it's not the exact number, around total CapEx into 2024? You said it's going to come off, but can you give us any range and any guidance there?
Dan, so that sort of CapEx guidance for 2024. Dan, sorry, is that the question?
Yes, a range at least of sort of -- I know you've obviously provided some guidance in the past, but there's quite a few moving parts. And so yes, whether there's any steer on what we should be thinking in '24 at this stage?
I think, Dan -- hello, Dan. So I didn't [indiscernible] the apologies for that. I think Dan the -- I think the new life of mine plan, I think we'll have that sort of sharpened up through sort of Q3 and really for release in Q4. I think sort of some of the options we are looking at there, I think that's going to drive that CapEx number as well around sort of -- around projects taking it forward. So I think in terms of giving you sort of a good steer, I think that's probably going to come part of that life of mine plan update.
I would say though that in terms of the other projects that we sort of know about now that we can probably sort of flag and you can put a pin in them and we will sort of poll them into next year. Solar expansion, that's probably in the order of $20 million to $25 million to take us up to that 50 megawatts of total installed base there. So that's sort of order of magnitude for that project.
Gravity circuit probably in the order of about 15, maybe 20 at the upside, maybe 12 at the bottom. That's the sort of gravity, so we are working through that at the moment. They're depending on where we go. But [indiscernible] 15 is probably not a bad estimate at this stage such yet to further work as well on that basis.
Grid connection, again, 15 to 20, I would say, -- well actually 20 to 25 on that, apologies, I think, would be a good number for them as well. So the three sort of big projects that we see going forward, solar expansion, gravity and grid. That's the sort of quantum, I think you could look at on this basis. Things around stripping and some of the sort of sustaining CapEx on underground development and those are the bits and pieces, they will fall out of that new life of mine update as well. But in terms of, if you like, sort of projects that's the sort of number I think you can envisage that will sharpen up over the second half of this year, but it's that sort of quantum of numbers as we go forward. Does that help?
Yes, that does, yes. Thanks. And just to just expand on that slightly, could you -- have you provided explicit guidance on the direction of the $48 million of deferred stripping on work because that should be a number that you've got line of sight on now, I would have thought and where that looks like next year?
For the stripping? No, I think that's going to come out in a new plant. And I think once we look at that, I think we've got the capital program that goes to the middle of next year. I think you can assume that, that capital sort of waste acceleration program will roll through and will sort of hit as planned. So that will finish sort of May, June next year. And then outside of that, in terms of our own fleet, our own sort of stripping plan, and again, it's an accounting issue where it sits above the average life of mine strip ratio, I think that will fall out that new life of mine plan update. So I think again, when you look at the first half of next year, you can assume that capital will finish off their program as currently contracted on our own fleet and how that relates to sort of the accounting treatment of that sort of deferred waste stripping that will come out of that new life of mine plan.
Okay. That's useful. Thank you. Yes. Okay. And then just one on Doropo. I mean you mentioned in your slide about exploration upside and backfilling the production profile to 200,000 ounces first 5 years. I mean it seems like fragmented mineralization. I mean, should we think about the upside here being more sort of backfilling and maintaining somewhere closer to 200 for the 10 years than -- rather than sort of large scale discoveries likely extending the life materially beyond the 12 -- sort of 10, 12-year time horizon?
So I think in the kind of the backfilling on the first 5 years, so we know there's some upside material that we couldn't include in the PFS just due to [indiscernible] So that will become available as part of the DFS. We know that we currently have drilled up some extensions to current pits. So we know there are some additional ounces that are likely to sort of extend current pits, and they will sort of help to sort of -- between at least those two things they are the two areas where I believe that we'll be able to sort of get that first 5 years, each year, at least with the two front of it over the first 5 years effectively.
I think in terms of the sort of the discoveries, if you like, additional mineralization outside of the current 8 pits, I think initial indications are that it's going to be of a similar grade to the current sort of ore bodies. If we found something that was 2.5 grams, but I think you could bring that sort of pit forward in the mining sequence and look to displace some of the pit to sort of increase the ounce profile there. It does look at sitting around about the average of the grade that you're seeing at the reserve resource at this stage anyway. So then it comes on to the fact that, because it's the same grades because you've got the same mill capacity, it's likely to add life rather than sort of it all being at 20,000 ounces for the 10 years.
If you pick up something kind on a grade pickup then I think you can sort of bring that [indiscernible] in schedule and you map the [indiscernible] as well. So I think I sort of in my head have this sort of view of the first 5 years, hopefully having a two in front of it, in terms of production. And then incremental resource discovery of the target that we know about now they're adding years onto the back end rather than sort of [indiscernible] there as well. Of course, it's still a was a chance that you find something that's got slightly better grade, you bring that forward and we can sort of push that 200,000 ounce target out longer. But at this stage, I think it's, yes, first 5 years in a two in front of them and then it's a mine life addition at the back end.
All right. Thanks a lot.
Thanks, Dan.
Thank you. [Operator Instructions] The next question today comes from the line of Yuen Low from Liberum. Yuen, please go ahead. Your line is now open.
Hi, good morning, Martin and Ross, and congratulations on the good H1 production results. Your optional guidance, you said that you're being conservative with the cost guidance. Bearing in mind what -- whether H1 AFIC has come out. I'm surprised you haven't reduced the AFIC guidance?
Good morning, Yuen. Well, our pack is across the Ross, of course. I think in terms of CapEx, we remain on track for the full year target. We remain on track for that. And of course, we've rescheduled some of that CapEx from H1 into H2. And of course, some of that CapEx would have an impact on the [indiscernible] as well. So I think we are right to maintain that -- that's all in sort of as a range and certainly for the half year. Let's see where we get to at Q3, but I think that we are still sort of [indiscernible]. Ross, I mean happy for you to sort of take a bit of a closer look at that from your perspective?
Yes, that's exactly right. Hi, Yuen. Yes, it was a great result to H1. We are light on CapEx. There's a big spend in H2. We are very much on track and everybody believes that, that's all going to drop. So we've kept consistent, but we will reassess it as we go into Q3. We have had the tailwinds of some of the input costs and things that have helped, but yes, we do have that innovated second half.
Yes, I do appreciate the CapEx will be higher in H2, but looking at your cash cost, that's come down quite a bit from Q1. It's come down by, I think, over $10 million.
Yes, that's right. That's right.
You guarantee the diesel price for H2, and we will give you the guidance, how about that. We just have to be careful looking at diesel prices, we've had that tailwind in the first half of the year. It has helped against the budget numbers. We are super confident that all of us globally, the sort of the oil and gas price or the diesel price of the property how does that going to perform second half of the year with one eye on Middle East production, Ukraine situation so on as well. So I think, at this stage, we still half the year to go, with diesel being a key sort of input to that cash cost and asset and noting the CapEx issue as well, I think to sort of to aggressively sort of lower that at this stage and then find that diesel price moves against that they could sort of look [indiscernible].
So I think that’s [indiscernible] quarter under our belt, get to Q3. If we are still seeing diesel where we need it to be, then I think we can look at this stage. But I think that's sort of the prudent aspect of us in terms of running and managing the business and setting external expectations is that we can't hedge the diesel price, we are a price taker, we still look at the international market as a property where the price will go. And I think at this stage, it's prudent just to maintain at this stage.
Okay. Thank you very much.
Thank you. There are no additional audio questions waiting, so I'd like to pass over to Alex for any written questions.
Thank you, Bailey. Just a couple have come through online. One is around hedging. Some of your peers are hedging over $2,000 an ounce gold over 2025 to 2027. You've hedged the downside, but would you take an opportunistic higher priced hedge given growth at Doropo?
Look, I think there's two things here. So let's look at the sort of the put program as we look at investment into Sukari over the next 12 months. I think that very much is a tactical short-term sort of decision to protect those cash flows while we continue this year, the accelerated stripping program and some of the with the CapEx projects into Sukari. So I think that we anticipate that sort of that reinvestment [indiscernible] to roll off next year stripping normalizes.
Those projects have dropped and developed, we see the benefits coming through. So I think then at that point, Sukari with [indiscernible] the cash cost curve would mean that hopefully, that tactical sort of downside protection isn't required. We still got the RCF in our back pocket to draw down on. So I think about sort of that risk management has been sort of price protection and available liquidity. So I think we are in a very nice position.
Doropo is a different story, of course. If we are in a project if we are going to take to Doropo forward, if we are going to build it, and we are going to project finance that I think that's a different scenario. I think at that point where you're looking to secure a project finance, I think having some sort of price protection within the development scenario is entirely sort of justified. And I think that when you're at that sort of level as well, I think you could then also look at different products.
Of course, the puts -- I don't really get to [indiscernible] true hedging. We don't -- we haven't created a commitment to delivery for the business. We've protected at this like an insurance policy in your car. I think once we got into the Doropo discussions, I think that's a different story. And then we could look at the project products, whether it be a flat forward, a zero-cost [indiscernible], these sorts of products where you are genuinely hedging because you're creating a commitment. But of course, with those commitments, one, it doesn't come at sort of financial cost of the business in terms of upfront, but it does give you potentially a higher forward price as well over that period.
So I think personally, and Ross, I haven't had a chance to discuss this in depth even between ourselves or with the Board. And I think we are fine to Sukari now. I think that [indiscernible] short-term programs in place. I think if we look at the Doropo, I think that's the time to look at different products that could see the sort of longer dated trades in place that would benefit from higher prices. But you are at that point, sort of committing to delivery of those ounces, and you are hedging in the true sense [ph]. But it is at that point, connected to a project finance associated with Doropo development. Did that answers the question?
I think it does. Then -- apologies to those who have some other questions on EDX. I've just tried to combine them as one. But with clarity around the mining terms, can you take us through your strategy at EDX? And following the Nugrus drilling, what would be your next steps?
I don't think strategy has changed, and that's to try and make discoveries within Egypt. If those discoveries are made in close proximity to Sukari can we basically look to benefit of the Sukari infrastructure to bring those ounces to account more quickly and more cheaply. And in discussions with the ministry -- and the minister, I should say, is that they see the benefit to that as well. The sort of the economic terms between the new code and our concession agreement are broadly similar. The sort of [indiscernible] is the same. There's no real delta for the government, whether they come in, buy a concession agreement or via the new code. But if we can utilize the Sukari infrastructure to accelerate the development of satellite deposits around Sukari, then that's great for the government to come forward and obviously great percent as well. So no change to that basis.
And on the other box, away from the Sukari no change in the strategy. Try and make a discovery that supports the commercial development decision. Can we find the deposit of scale and grade that supports a CapEx investment. What we now have, of course, is that with the exploitation code terms completed is that we have the confidence that if we were to make a discovery on either the current blocks [indiscernible] or further north of [indiscernible] then we now know what those terms will be in terms of the development of a standalone project as well. So it just gives us better surety on the long-term for those other discoveries. It tells us that -- if you make a discovery close to Sukari, it says that the government will -- the economic terms of the government get are broadly the same. So there's no delta there.
In fact, it's probably strengthened the ability to bring some of those [indiscernible] houses into Sukari because the government win either way effectively as well. So no, look, I think, to be honest with you, it doesn't change how you. I think what's really encouraging is that it's a very [indiscernible] mining community that you can [indiscernible] with the business supported government that wants them there, lots of geology to go and have a run out and really [indiscernible]. So I think, yes, I think it's really positive about that.
Great. And then [indiscernible] refresh, but the last question, I believe, is you guided at the beginning of year that you'd be doing 95,000 meters of drilling at Sukari. How has that progressed in H1? And would you expect that to be captured in an R&R update later this year?
So that is the underground drilling out the 95,000 meters we are talking about. Yes, yes. So that is -- so half year about 48 kilometers. So just above on the run rate about halfway through where we would be. And of course, I've mentioned before the kind of the three buckets though, we kind of sort of grade control that supports effective sort of preproduction sort of [indiscernible] the resource model. We then have a bucket where we -- another third where we look at sort of converting inferred to kind of measure and indicated, so we can bring it into reserve.
And then we have about a third of the bucket, which then looks to extend the limits of the ore body, can we go and find new target material as well? And of the 48 kilometers that we've done first half of the year, about 16 kilometers of that work has -- that drilling has gone into grade control to support preproduction and about 32 kilometers, the balance has gone into the exploration bucket, all infilling, upgrading, known targets into resources. And then extending the ore body through identification of new targets as well. So that's kind of the split down in the first half of the year. And I would imagine that, that will roll forward into the second half of the year and beyond.
Wonderful. That is all the questions from online.
Perfect. Well, I'd just like to say thank you to everybody for taking the time for listening this morning. Lots to get through, obviously, taken a fair chunk of everybody's time, but I think a really positive first half year at Centamin. Operational delivery has been superb, [indiscernible] cost project at Sukari moving ahead, delighted with Doropo as we start to sort of push that forward. And then of course, absolutely delighted in Egypt with the new mining code and starting that work on EDX as well.
So some great momentum, some nice new [indiscernible] come hopefully in the second half of the year around life of mine plan and those other projects as I look forward to taking Centamin into H2. And if there's any sort of follow-up questions or thoughts, feel free to reach out to us doing the usual channels to Alex, myself or Ross, I'm happy to engage with you from there. So with that, I thank you all again for taking time this morning and look forward to speaking to you all soon. Thank you.
This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.