Anglogold Ashanti PLC (AU) 2022 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti 2022 Year-end Market Update -- there will be an opportunity to ask questions later during the conference. (Operator Instructions) I'd now like to turn the conference over to Mr. Stewart Bailey. Please go ahead, sir.

Thanks, Claudia, and welcome, everybody, to our full year results for 2022. -- you have on the line, Alberto and Gillian, who will be giving the presentation and the executive team also in support. I would ask you before we get into the presentation, just to look at the safe harbor statement at the front of the presentation. It contains important information regarding forward-looking statements that may be made in this presentation. It is important, and you should read it. I'm going to hand over without any further ado to Alberto.

Good day to all, and thanks for joining us. Before we get into the detail, let's look first from a high level of how the year went. It has been a period of significant progress. We have in place an operating model to suit our business and the right people in key roles across the business. We've delivered on our production and cost commitments to the market and have begun to regain cost competitiveness versus our peers. We're starting to see progress in a number of places, which confirm we're on the right track. This is a testament to our focus on execution and the success of our inward investment program. You can see in our grade improvements, in particular, cash conversion is much better and so is our cash flow. And importantly, we're seeing strong ESG performance.

Safety continues to trend in the right direction. That's down to a clear safety strategy that emphasizes risk awareness and a clear set of controls to manage the most important risks. Our total recordable injury frequency rate was 1.26 injuries per million hours worked. That's a marked improvement year-on-year and less than half the ICMM member average. And crucially, we have no fatalities at our managed operations.

Let's look at our key milestones. Free cash flow was up fivefold to $657 million, and free cash flow before growth capital, the metric on which dividends are calculated, was close to $1 billion. Mineral reserves increased 3.5 million ounces per depletion that gives us additions of 12.12 million ounces over the last 3 years. We progressed our reinvestment across the portfolio with Geita, again delivering strong upside. Our balance sheet is robust. Liquidity is strong at $2.5 billion, even after acquisition and dividends.

Turning to Nevada. We have made in mineral resources at North Bullfrog, Mother Lode and Sterling, which we acquired this year. Obuasi met production guidance of 250,000 ounces, Phase III is on track for year-end completion. We also set a target of 30% reduction in our Scope 1 and Scope 2 emissions by 2030, and we've declared a final dividend of USD 0.18 per share, taking the full year payout to $0.47 per share or around $200 million.

On highlights, we've committed to getting the basics right and that's what you will see here. We've delivered strong year-on-year improvements in production. We estimate inflation running at about 12% the impact of the high inflation around the world, impacting AGA at around 12% 2022, and we have limited the cash cost increase to half of that. Or in other words, we were able to reduce in real terms, our cash cost per ounce in about 6%. That was helped by higher grades better planning, efficiency gains and fewer stockpile drawdowns which helped offset that inflation. Underpinning all of that is our inward investment drive, which is starting to bear fruit, especially at Geita and Iduapriem.

All-in sustaining cost was marginally higher with improved production offsetting higher cash costs. TSF compliance capital remain a factor accounting for $31 an ounce of our group ASC. Free cash flow was stronger as mentioned, even after investing CapEx of $1.1 billion into our assets, investing $517 million in acquisitions and paying $203 million in dividends. Our balance sheet is solid with low gearing and very strong liquidity. We Obuasi made good progress during the year and achieved its production and cost guidance. Total production was 250,000 ounces at a cash cost of $914 an ounce, well below our average even before it's fully ramped up. So far this year, we have been achieving more than 4,000 tonnes per day. Phase 3 will continue as planned through the end of this year, setting up us for the ramp up to 5,000 tonnes per day and eventually well over 6,000 tonnes per day.

EDPR's production was higher as we treated higher grades from Cut 2, driven by our reinvestment in this asset. As a result, cash costs improved by about 10%. Siguiri's production was higher. This despite a 10-day stop in July related to employment related protest. -- cash costs or the impact of higher fuel costs, stockpile movements and a much stronger Guinea Frank. We're starting to see the benefits of the full asset potential program at Siguiri. We have mobilized a second contractor to deliver higher volumes of higher-grade oxide or from ROC 2, and we have renegotiated key contracts of fuel and consumables, which will help control costs.

Geita recorded another strong production result with production exceeding 500,000 ounces for 2022. Higher volumes and grades drug performance in H2. We're reaching the end of the reinvestment program and Geita now back to operating above 500,000 tonnes per annum. Kibali's production in Q4 rebounded relative to Q3, Q3, also driven by grades and revenues. I mentioned before, Obuasi had a strong finish for the year. Phase 3, the KMS shaft remains on track to meet the K1 2020 for deadline. The bulk of the work was focused on commissioning the first KMS winder to a low material to be hoisted from 4,400 level.

In 2022, achieved -- we achieved the following milestones: hosting via the KMS Chef, Rocksure November, pumping to drop the water level below level 50, commissioning the material handling systems from 44 level to surface, completing the new Ventshaft, which was critical to KMVS pilot home with renin started in December, progressing the KMS shaft to the 44% level. The next key project milestones include completing the new ore pass followed by rail construction and establishing a new pump station on 50 level.

Latin America. We also saw some encouraging improvement from Latin America at CVSA and so Grande. At AGL, Megara we had to manage plant throughput to keep within permitting tailings limits. Our TSF investment in Brazil over the last 2 years has amounted to $221 million. You would have seen in our disclosure last week, we suspended tailings deposition, the main TSS that services the Cuiabá Mine complex. I will speak more of this in a moment. (inaudible) our cost production was lower year-on-year due to the lower ore volumes process, partly offset by higher grade recovered. We completed our strategic review of CDS and have elected to retain the asset.

The CDS management team will focus on rebasing the mine plan with the name to return to a cash neutral position this year and to generate positive cash flows in the medium term. Serra Grande saw some benefit from higher production and lower TSF spend and at Cerro Vanguardia production was higher, mainly driven by higher grades. In Cuiabá, as you know, there has been a raft of new tailings related legislation and regulation introduced in Brazil over the past 4 years. Last year, additional TSF regulation was introduced, which, among other things, required a new detailed risk assessment to be conducted on all using internationally recognized methodology and facilitated by an independent expert.

In our case, the assessment group, led by this independent external expert and comprising internal and external specialists apply Canadian stability standards to our TSFs with respect to post-liquefaction factor of safety. This is now becoming common practice. Our recommendation from the risk assessment has been to buttress our [Casinos] TSF to bring its post-liquefaction factor of safety up to Canadian standards. To be clear, Casinos is safe and structurally stable and in line with the recent assurance assessments by independent tailings experts and the company's own DSF team. The facilities factor of safety in both trained an undrained and unrate are fully compliant with relevant regulations.

So, what are the next steps? Well, we complete this buttressing, we will stop the position of filter tailings on the TXF and also processing of concentrate at the Troska. Information on the time line for the completion of the porosing is expected to be provided after engineering and geotechnical by independent tailing experts. When it's complete. In the meantime, mining of ore is continuing at both mines. During this period, we expect that the site will continue to extract gold from the gravity circuit at a rate of 5,000 ounces on average per month and will produce gold in concentrate at an average of approximately 10,000 ounces per month with options being assessed to sell gold concentrate in the future.

Sunrise in Australia. Sunrise Dam production was marginally higher. We saw inflationary pressures across the spectrum, mining and maintenance contractors, labor and also diesel explosives and consumables. The full potential initiatives at Sunrise are starting to bear fruit, however, following establishment of the underground workshop, Jumbo availability has increased. This has led to an increase in development rates and mining flexibility by year-end annualized undergrounding mining volumes were up 8%, and the plant recovery rates have improved by 2%. PFS work related to the potential [Cliopitt] that was one of the big NPV impacts of the full asset potential review are ongoing. We have already declared resource on the Cliopitt by 750,000 ounces, and we expect to declare reserves sometime this year. When that work is finished.

Tropicana's production was up 15% on higher grades and tonnes processed. That helped us achieve a 21% cash cost improvement year-on-year. Havana was stripping continues to progress, but the time line is under pressure to the shortage of skilled operators. We've also commenced a PFS on an underground mines at Avala. Talking about exploration. Exploration is foundational to our business. Last year, we again managed to replace depletion, adding 3.5 million ounces mineral reserves on a gross basis. And this slide shows exactly why we are still excited about the potential within our portfolio. We're in the midst of a program to increase investment in reserve development and brownfield exploration. This will improve reserve conversion, extend reserve lives, improve mining flexibility and upgrade knowledge of our ore bodies.

We are making strong progress. We made cumulative additions over the past 3 years of 12.2 million ounces of mineral reserves, which have come into our inventory at a cost of $67 an ounce. Our mineral reserve has grown 26% over the last 6 years. And given the mineral resource base we said on we expect to leverage this to grow reserves further -- let's break down that growth. break down our exploration performance this year. So mineral resource additions totaled 4.9 million ounces, 7.51 million came from exploration, 5.1 million came from the acquisition of Nevada and 2.7% came due to the economic changes, including resource price increased by $250 to 1,750.

These increases were partly offset by depletion of 3.2 million ounces and other factors of 3.5%. As a result, the net change year-on-year was plus 8.2 million ounces. Mineral reserve additions totaled 3.8 million ounces, $2.8 million from exploration, one, due to economic changes, including the $200 an ounce increase in our reserve price to $1,400 an ounce. -- that's about 18% of our increases in mineral reserves were due to these economic changes. These increases were partly offset by depletion of 2.9 million ounces and reductions due to other factors of just 0.3 million ounces. As a result, the net year-on-year reserve change was positive in 0.6 million ounces.

At Geita, we're extending the reserve life remains a priority or has been in the past. We have added 1.5 million ounces of reserve pre-depletion, bringing the total added over the last 3 years to 3.7 million ounces. And currently, we sit at about 7 years of life of reserves. We continue to see further upside potential at Geita and this work has been incorporated into the asset FP protect.

Turning to Nevada. A few months ago, we talked about the resource endowment exceeding $10 million that, that was our expectations. We have now declared 1.5 million ounces of mineral resource at North or 1.7 million ounces at mother load and just under 1 million ounces at Sterling. At our silicones discovery, we have added another 0.8 million ounces, bringing its resource to 4.2 million ounces. So, in sum, that today, at 8.4 million ounces, the -- what we have declared of resource in the Nevada province, but we know that there is enormous potential for more growth. We have not yet included what we consider the real gem in the portfolio at Merlin and have always scrapped the surface of the Sterling land package, the enormous potential here.

Our improving understanding of the geology structure and alteration in the area is helping us identify other targets and is reinforcing our view on the potential of our consolidated brand position. Feasibility work at North Bullfrog smaller high-return deposit has continued to progress. Work today indicates that this deposit has a very low stripping ratio and the heap leach processing or selected milling can deliver very attractive returns. Permitting continues to progress, and we continue to target first production in about 2 years. We have had 6 drill rigs in actions through most of the years at BT and expect to double the number this year. We expect to just invest about $50 million in exploration in the profit this year.

We're building a strong experienced project technical and permitting team and with the new additions to our land package and a more favorable configuration or confidence in the potential of this is growing. We're still working to consolidate our newly acquired land packages, and we'll have more detail in the months ahead. As you can see in the photograph, the combined lab package allows us to realize the potential of the BT district through systematic exploration and optimized project development. This slide shows the positioning of the Seahorse, which we believe is an extension of our Merlin ore body. And together, [Seahorse McCurley] should either work on their own or provide economies of scale to silicon. In addition, the land package we assembled gives us an fetter access, exploration upside potential and other benefits from consolidating a larger landholding to in the BT district. Okay. Over to Fineance.

Thank you, Alberto, and good afternoon, everyone. 2022 can be characterized by significant macroeconomic volatility and inflationary pressure, stability and operational performance and a focus in cost on the things that we can control. During the year, gold price fluctuated from loans of $1,600 to over $2,000 an M, averaging around $1,800 across the year. The oil price increased total cash cost by $37 an ounce, with other inflationary impacts from input pricing and labor of $83 per ounce. Fluctuating foreign exchange rates, particularly in Australia, Brazil and Argentina had a $21 on favorable impact. Overall, our operational performance showed improved stability and delivery against the prior year and our internal expectations. Production of 2.7 million ounces was 11% improvement over the 2.5 million in '21 and in 2022 in the top half of the guidance range.

Obuasi continued to ramp up with gold production more than doubling year-on-year. Iduapriem production was up 23% on improved ore volumes processed and higher recovered grades as we access orations from not 5 and [DEBRAVI] cut back to CVSA and Tropicana increased production by 17% and 15%, respectively. Unfortunately, CDS in Brazil ended the year 12% lower following torrential rains in Q1. Higher grade lowered cash cost by $60 an ounce, while a further $41 came from favorable inventory movements. After taking into consideration the noncontrollable factors, such as inflation and exchange rates, cash costs were 4% lower at $1,024 net. All-in sustaining costs increased by 2% to $133 per house, while well within guided ranges and significantly below inflation.

The balance sheet continues to be solid, long-dated debt maturities, low leverage and $2.5 billion in liquidity with $1.1 billion in cash on hand. Adjusted net debt of $878 million was 15% higher year-on-year and includes $694 million received from Kibali, partly offset by $365 million for the Corvus acquisition, $150 million for the Coeur Sterling acquisition and dividend paid of $203 million during the year. Adjusted net debt to adjusted EBITDA was 0.49x at year-end, half of our leverage target of 1x through the cycle. Cash conversion continued to improve in 2022, starting with Kibali and the DRC, we received $74 million in Q4, comprising a shareholder loan repayment of $50 million and $24 million in dividends. Our remaining share of the outstanding cash balance at the end of December '22 was $40 million. Our share of recoverable VAT and fuel duties increased by $5 million to $86 million net of discounting provisions at the end of December. Fact lockups in Kibali continue to be a focus.

In Tanzania, total Verified back claims offset against corporate tax payments for the year was $45 million. In Q4, the VAT receivable increased by $9 million to $153 million. New claims of $20 million was submitted while verified frac claims of $8 million were offset against corporate tax payments. We continue to engage with the Tanzanian authority regarding the mechanism to recover our historical VAT accumulated between July 2017 and June 2020. In Argentina, CVSA had a cash balance equivalent of $116 million at the end of September.

These funds are available to settle previously declared offshore dividend. -- application to transfer a portion of these funds was made to the Central Bank. And in December, the bank approved the release of $18 million to us. The total cash balance continues to be invested at attractive rates of return locally and remains fully available for CVSA's operational requirements. Guidance for '23 is partially impacted by the events that we have on. As Alberto has mentioned, geotechnical work is required before we understand the time and capital it will take to complete the budgeting.

In the meantime, we will produce gravity gold at around 5,000 ounces a month and or in concentrate at about 10,000 ounces per month. We are currently assessing options on concentrate sales, and we'll take a decision based on best value. So, looking at Gold's production for the rest of the portfolio, excluding Fria, production is expected to be between 2.45 million ounces and 2.610 million ounces. -- Obuasi is expected to continue its ramp up to for production with production this year expected to step up to around between 320,000 and 330,000 ounces. EDPR includes continued construction of the mediates and mining from Block 7 and 8. Total cash costs for the group are expected to be between $1,050 per ounce and 110. This is based on our best assessment of inflation and exchange change expected this year.

We also expect a step up in cash cost this year at Tropicana, where deferred stripping in the final cutback at the Havana pit, which has previously been categorized growth capital in prior years is now being expensed as that cutback moves to commercial production -- the step-up in Tropicana accounts for around half of the increase in cash cost this year of $37 an end. All-in sustaining costs are guided between $1,405 per ounce and $1,450 per ounce. That includes sustaining capital levels, slightly above our long-term average as we continue to invest in improving reserve light stripping programs and increased development, which together are aimed at improving the overall quality and flexibility of the base portfolio. Total capital expenditure, excluding any capital required at Cuiabá, is expected to be between $960 million and $1.070 billion, and that includes growth capital of between $280 million and $310 million. I will now hand back over to Alberto to conclude.

Thank you, Gillian. As I've said before, 2023 remains a transitional year for us. We remain focused on making more improvements and on delivering more consistent results in line with the targets we've set out. I would, however, underscore or highlight that we are proud to have been able to reduce in real terms are in sustaining costs by 10% during 2022, and we expect to have a further reduction in real terms by 2% in 2023. Nevertheless, more needs to be done, and this is where the full asset potential program is working as intended. We have basically finished most of the diagnostics and have begun the implementation phase and we expect to see the bulk of the results in '24 and '25.

Obuasi is on track to deliver Phase III at year-end. We have the right people in place and the right organizational structure. We focus on improving operating and capital efficiencies. Our world-class exploration team continues to add value through the drill bit across our properties. Our technical team continues to progress our Nevada opportunity. So why AngloGold Ashanti? We have a diverse portfolio and a clear strategy to close the margin gap with our peers using our full asset potential process and bringing in new lower cost ounces already in the pipeline.

We continue to improve our ESG practices from a high base. Our safety is among the best in the industry, and we have a 15-year track record on GHG reductions with more to come. We have true partnerships in our communities and deliver real tangible benefit to our host. We have a new experienced and highly motivated leadership team. They bring diverse world-class technical expertise and experience operating across developed and developing markets.

Our balance sheet is robust with capacity to fund sustain capital needs, shareholder returns and growth, we are focused on ensuring its plays that way. Discipline in capital allocation remains an absolute priority to us, and we have in place a clear dividend policy and leverage targets. -- replenishing inventory in a competitive way is fundamental for any gold company, and we are among the best in that regard. Don't take my word for it. You need only to look at our track record in brownfield exploration, replacing our depletion and then the new discoveries, most recently in Nevada. Our aim remains to narrow the value gap with our peers by regaining cost competitiveness. The foundation is in place and working hard down to deliver. With that, we can take questions.

Thank you very much. (Operator Instructions) The first question comes from Jared Hoover from RMB Morgan Stanley.

Afternoon, Alberto and team, thanks for the call. I think it might actually be early morning on your side, but I have 3 questions. My first 2 are directed to Alberto. And then my last question, I'm hoping Gillian might have some answers for me. So my first question is on Cuiabá, -- my understanding from what you guys are saying is that on a monthly basis, you'll be selling 5,000 ounces of gravity gold at spot coal prices. And then you might have 10,000 ounces of gold in concentrate for which you're exploring options. But how difficult is it to sell that golden concentrate? And what I'm looking for is to understand what kind of discount to spot gold prices would you have to sell that gold concentrate Act? And aligned to that, it looks like there'll be another 5,000 ounces that will be a working capital build. So, when accounting for that working capital build, should I just be applying the cash cost at Cuiabá. And that would effectively give me my working capital both. So that's my first question.

My second is around your guidance. I think you've split out cover. And if I compare your FY '23 guidance to your FY '22 guidance, ex CoA, it looks like production is going up by about 30,000 ounces at the midpoint. Now if I take a step back, it looks like Oberoi should be growing by about 80,000 ounces. So that implies some of your assets are potentially going backwards. I would think that, that would be at some of your Brazilian operations at CDS and Serra Grande given those assets have been impaired. But are there any other assets in the portfolio that you can highlight for me that are going backwards. And then my last question for Gillian. I know it's still early and you've only really been in the seat for about 2 months, but I was hoping that maybe you'd have some color around what you may have identified as easy wins at AngloGold given that I think that you are responsible of part of the team that was driving asset efficiency programs at Rio. So maybe if you've identified anything here at AngloGold that could potentially be an easier replication of what you've done historically? And just to get your sense of how difficult do you think the full asset potential program is at AngloGold because to my mind, it looks like certain assets like in Brazil might carry an above-average degree of risk when trying to get those asserts to their full potential.

You don't want to ask another one. Okay. Let me start with Cuiabá. Look, we -- this is still work in progress. As you say, we were -- through gravity, we can produce that about 60,000 ounces this year is what we are assuming. And then what we know is that we have built the path to store concentrate and that we can produce in a midpoint, but that has various to, as you saw, of about 10,000 or 120,000 ounces for the year. Now we are studying options. There are companies who do and sell the concentrate and we are talking in Brazil, and we have spoken with those concentrates. And we're just doing the evaluations of selling the concentrate or see what we buttress finishing the puts the processing plant had an excess capacity of about 30%. And so do we wait there. So, at this stage, I can't give you more details on costs except that it's already being done by companies in Brazil.

Regarding guidance, you are right, as you think you've done the math well. To give you an idea of how we think about guidance. If you look at the guidance, we gave for 2022, well, that has some expected -- the midpoint had, okay, these are what all of our operations will produce. But since that moment, we had torrential rains in Brazil in the first 3 months. COVID hit significantly the Australian operations the first 3, 4 months. And so yes, in the end, we were able to meet that guidance. So, guidance always at the midpoint, will have some risk that we assess that we -- we don't know if it can happen, but we always have to assess in mining that some risk can happen. Now if you -- if everything is perfect, what I can tell you is that, yes, Obuasi is supposed to go up by about 70,000 ounces. I think our Australian operations may go up a bit, and the rest, excluding Cuiabá, will be flat. So, on average, I don't see anything going down, but this is with everything going perfect. So, I think our guidance is correct how we have put it. And then Gillian? Yes. She loves (inaudible) .

Now, look, I think -- thanks so much for the question. And you're right. I'm only here and I know less than I know more. But what I will say, and it's really quite important is that the full asset potential program or the way we're thinking about the future is not a quick fixed cost-cutting exercise. So, you sort of said at the fullest potential went. We would say no, because we're looking for this fundamental shift in the way that we think about the things that we can control and the way we optimize performance. So, it really is about optimal performance rather than cost cutting. We're interested in the long-term health of the business, and that will require a sort of a long-term focus and that trucks.

What I can see that we can do differently in terms of performance management is really look very consistently across the portfolio at the financial performance metrics in a standardized and consisted way, really focusing on the things that we control. We're not price setters. We don't control inflation or exchange. And so, we will be very aware of those impacts, but we're not focused on those we're ultimately focused on the things that are in our control. So that's production stability, operational performance rates and then fundamental cost leadership. Yes, I think and probably the last thing I'd say is, it is the primary focus for me and for my team, it will be something that we will be very deliberate about in the coming months.

Okay. Great. Thanks, Alberto. Thanks, Gillian.

Thank you -- the next question comes from Cameron Needham from Bank of America.

Question for Mick. Look, on M&A, I know you previously stated it isn't part of AngloGold's strategy sort of near term, but I just wanted to get a bit of a refresh on the view given our topical lists. Is that still the case?

Sorry, Cameron, we didn't get you right at the beginning of that question. Could you just repeat, please?

Sure. Just let me know if you can't hear me. Just on M&A. I know you previously stated it isn't part of AngloGold's strategy and near term, but sort of given how top olives, I just wanted to get a refresh of the view. Is that still the case?

Yes. Thank you, Cameron. It is still the case. Look, we assess -- we have a team that assess opportunity, and we still find that the best way we can add value is internally. The rate of return, if you can put it of what we're doing in full asset potential is infinite because it's -- for most of them, it's very little investment and very high return. And so, we just don't see anything that could match that -- by the way, it was a great title in the piece by your organization, better safe, than sorry. So, we thought that we're fully aligned with that. So, thank you.

Thank you -- the next question comes from Adrian Hammond from ABG.

Just on Obuasi for 2024, what should we be penciling into our models for that production given Phase III coming online? And then secondly, just broadly speaking, on the operating environment, how that's gotten better or worse for you given over the last 2 years, issues with the supply chain inflation and COVID how's that playing out for you now? Are you finding it easier or better to manage your business?

So, look, what we have said is that we expect at the end of '24, we're pretty confident that we'll be hitting the annual rate of 400,000. There's still -- right now, today, we still need to do a lot of things. And so, finish the KMS shaft that finishes around the year, and then there's a ventilation. There's -- so there are things you just -- it's difficult to give you a very exact sort of number. If things go very well, we can hit that annualized sort of number by midyear of 2024, and that would take the year for about 370 or something. If things are delayed, we will still hit the annualized rate of 400 by that, and then that will set for the following years, sort of the baseline.

Regarding operating environment, -- it's always hard again. And right now, the situation, obviously, the economic situation and after COVID, it has hit all these regions very hard, all the world, very hard for these regions, in particular. But we have good relationships with the government. We're continuously engaging with them. I have personally engaged in Ghana with the government, in Tanzania with the government. And what we can say is that we -- these governments understand that we deliver win-win propositions. We are good sort of we value the communities in which we operate. We generate like local employment in both places, it would be between 98% and 99%. And -- and so we'll just expect to continue to see that dialogue. What I can say is that a lot of the noise that you hear, for example, there was some noise on taxes on DRC, and Barrick was very clear saying no, we haven't -- that's not true. And so, we haven't seen anything like that. And Obuasi, yes, we have heard the 20%. But for us, our local spending currency is actually more than that. So up to now, what we can do is keep engaging, but all these are, we believe, very good countries go to keep investing.

Thank you. The next question comes from Leroy Mnguni from HSBC.

My questions are mostly just around your portfolio. So, you've had some feedbacks in your South American operations. Recently, they seem to be the higher-cost operations. It's where your impairments are coming through. Could you maybe just give us an indication of which of those assets do you see still remaining core to your portfolio and which you are happy to let go? And then just on (inaudible) update on the environment or permits on that and how that's progressing. It does seem like the Colombian authorities or at least that it's difficult to get permits through there and just an update on Gramalote as well on that disposal and how that's progressing. Yes, that's it for now.

Thank you, Leroy. As you well know, we try that we had a very long process of selling the smallest assets, that is CDS. And we were looking for a company -- it wasn't a negotiation on price. It was a negotiation of -- if they had the right skills to manage an asset that has upside. We do see in all of our plants that assets having some positive cash flows in the medium term. But beyond anything, it was the ESG responsibilities that come with owning an asset like that. And we have to be quite confident that, that was the case, and we couldn't. We couldn't come across the line that the companies that were interested could deliver the commitments on ESG with a high degree of probability that we were seeking.

So, look, what I can tell you is those -- the 2 -- there's 2 assets, Serra Grande and CDS in cash would have lost quite a bit of money last year, let's say, close to $100 million. And our expectation this year is for them to break even. If we can have them breaking even, even though it's a lot of management time spent on this for now, we -- until we have a further revision of the strategy, we just need to do the best that we can managing those assets. And that could be a differentiation between last year and this year.

Quebradona, we continue to work on the -- measuring with piezometers and installing tensiometers on the ground. And that is -- we need to do that for many, many months for about 12 months to be able to prove the water impact of the project on 2 of the municipalities. So that hasn't changed. It is low. It's as you say, the government is very -- let me put it confusing in the signals that it has -- it does like copper, but obviously, it doesn't like mining in general. And so that sort of complicates a bit. But we'll continue -- we are continuing to -- with the most important sort of technical aspect to us to try to get a baseline on measuring water to then be able to go to the environmental agency.

On Quebradona, we are starting the process of Gramalote. We're starting the process of selling it in this first quarter, and we expect to be finished sometime in the third or fourth quarter. That one doesn't have much ESG consideration. So, we're -- I think that we're -- we would have a higher probability of success.

Maybe just one more, please. Your all-in sustaining cost guidance range is quite narrow compared to the range you sort of guided this time last year. Should we take that as an indication that the operating environment is getting a bit easier and some of those inflationary pressures that we've seen in recent quarters are starting to abate.

Look, I would take it as that we are probably, if you -- if you define the difference between cash costs and all-in sustaining costs for -- so we are getting to a place where I think is sustainable and where most companies are arriving. And that's somewhere between $350 and $400. If you look at it in our guidance, at the midpoint, it's about 360, I think, and in the high point, it's about $400 difference. And that's where I think we will sit. If you look at most companies that have come out, that's where they are coming out in this measure. So that includes not only stay in business capital, but it includes corporate groups exploration over the spend and others. So, you're right that the narrowness is that in that metric, I think we are feeling that we are coming to a much better sort of level.

The next question comes from Tanya Jakusconek from Scotiabank.

Yes. Just wanted to circle back to Brazil and the tailings work that you're doing. Maybe Alberto, can you give us an update or a better timing as to when all of these studies are going to be completed? Or is this sometime in 2023? And when they are completed, are we expecting obviously additional capital above and beyond what is provided in the guidance for these tailings. I'm just trying to understand whether you've captured some money for it in 2023 guidance? Or can I expect more to come?

So, as I probably mentioned previously, we are -- we haven't completed the engineering studies. And without that, we can't really give you estimates of cost or timing. It is a month thing. It's not a year's thing. It is buttressing. -- button means putting rocks at the base of the dam. So, it will obviously increase CapEx. But in the scheme of things for AngloGold, I think it will be quite manageable. So, our guidance excludes all those numbers because we don't know. And so, the guidance we gave on CapEx is the...

I guess I'm trying to get a sense of time. So, do you think like the Q1 conference call, you'll be able to provide us more insights into this? Into the capital...

To give you more insight. I don't know if I then it would have finished the engineering study, but we'll certainly give an update on Q1. And if it's not -- obviously, if we can't give more details certainly by Q2, we will have significantly more details. But I just don't want to time myself because I can't time to what I don't know. But it is a monthly Between Q1 and Q2, you should have much, much more details.

Okay. That's helpful. And maybe going on that, I noticed that in your priority -- key priorities for 2023, you have provided to your guidance. I thought we were expecting a 2024 guidance with year-end reserves at year-end financials, i.e., -- when you talk about provide to your guidance in your 2023 key priorities, what exactly do you mean? Will we sometime in 2023 be getting to your guidance? Or maybe if you can expand on that, that would be helpful.

Yes. You're right. We -- so our plan right now is to give more color in real terms. I can tell you that it's just inflation complicates life enormously for everybody. But we should -- we will give in May, we will begin to give some guidance in May of this year for 2024. I more relating to -- it will be related to the impact of full asset potential and cash costs. At this stage, but we will give more details in May. We are expecting -- let me talk a bit about full asset potential and because it is applied to this.

In our current guidance, we already have about $40 per ounce included of improvements because of full asset potential. And that is what allowed us to compensate for the very significant increase in Tropicana. We expect to have a further sort of impact of full asset potential of about $60 an ounce either this year or in '24. And so that we can deliver that, and we need more details and we will provide that in May, that will significantly advance our objectives of continuing to reduce the gap between ourselves and our main competitors. So that's what we're thinking right now. It's around that a further additional $60 an ounce coming from full asset potential -- so cash cost ranges and production rates for 2024 in May of this year. But it will be something around it.

Okay. So, in May of this year, we would get a production number for 2024 total cash costs, all-in sustaining and a capital number, so for new numbers in May?

I think at this stage, yes, yes, we should.

Okay. Great. That's helpful. And maybe just my final question, if I could. Just as you see the year progressing, how should we think about the production and cost distribution on a quarterly basis. Obviously, with the ramp-up at Obuasi, I'm assuming that Q4 second half is going to be better than the first half. I don't know how your capital spend is going to be. So maybe yourself or Gillian can provide some sort of high-level guidance for the quarters for both production and costs. That would be very helpful.

Look, you saw last year, the increase between H2 and H1 production is massive. I don't think it's going to be as inclined as that. But certainly, we would expect higher sort of a gradient of -- so higher H2 than H1. In terms of CapEx, that's always an issue, but we will try. But we are trying internally to smooth it out much more than we have done in the past. But maybe I would say, a 55-45 or something like that distribution.

So, 45% first half, 55% second half for production. Okay. And then all is on volume.

CapEx for production, I think the grading is much more inclined because of Obuasi.

Sorry, I didn't understand that.

Sorry?

Sorry, I didn't get that back to next sense.

So, the -- so what I've said is the guidance is on CapEx that you asked of 55, 45. On production, we're not giving numbers, but we're saying that the H2 would be higher than H1 just because of velocity still ramping up from 250 to 320. And we usually have, in any case, a higher H2 than H1.

Thank you. At this time, I'd like to hand over to Mr. Bailey for questions from the webcast. Thank you, sir.

Thanks, Claudia. I think with apologies to everyone send questions and many of them have actually been answered already. So, if you forgive me, I'm just going to go to the ones that haven't from Arnold Van Krone at Nedbank, he says AngloGold's portfolio is widely spread over many jurisdictions. However, in some of these countries, your assets lack in-country scale. This lack of scale could be an impediment to becoming truly cost competitive at these assets even after implementing the new operating model. Do you have long-term plans to address this and how? And does that imply that longer term, you may need to bulk up or sell out some jurisdictions?

Look, our -- if I see our portfolio, I would think about something could -- would be of the scale that we would make. But there are others -- basically, the 2 Brazilian ones, I would talk Serra Grande and CDS that are subscale. They are of 100,000 ounces. Cuiabá actually, we never disclosed it separately. But -- and right now, it has this issue, but it is actually a very good asset. It's a 250,000 assets, and it's -- in normal terms, its cash costs are around $900 of cash. So that's one that in the long run, obviously, we would like to keep. Look, the issue that I have is we did try to sell CDS. But if you look at the history of AngloGold, it has sold so much and you can't continue to shrink it to greatness. So, the press that we can do is run them the best that we can and then we see. I've sort of outlined a strategy for the next -- it was 3 years, and now it's 2 more years, 24 and 25, and then we see that's basically how I have put it. But right now, I -- we do have -- it's not a complicated operation. We have about only 10 own managed operations and one JV. So, it's compared to other companies up there, it's actually quite manageable.

There are a few assets, and they're basically located in 3, maybe 4 jurisdictions. So, it's -- but your point is clear. On average, we have -- the average scale is lower than the big ones. So that's what I've said that we can never really seek to have the same cash cost as bigger players, but we can get very close. And that has been the aspiration get within 2 digits. Just to remind about 2 years ago or 3, we would have been about $250 an ounce difference. I think right now, we don't know how inflation is going to affect them, but my gut is that we would be about $170 million -- and with what we're doing in full asset potential, we should get within 2 digits, high 2 digits or still to digits. And we can do that, and we could have a 3 million ounce company, we would be, again, back to where we belong to. That's -- it's a very simple strategy in the year. And then we see...

Thanks, Alberto. The next is Sandile Magagula at Mutombo Wealth. He said, what is the cost of converting resource to reserve in Australia? And what cost do you take into account to right at that pace?

Look, I'll ask Terry to help us with that. He's our Chief Development Officer, is roughly around per ounce to convert from resource to reserve. But maybe you can give some more color.

Yes. Thanks, Alberto. So that $40 an ounce number is for Australia. At a portfolio level, it's closer to $60 an ounce. And just to emphasize, we don't drill to convert to reserve, but we drill to upgrade the resource from inferred to indicated or measured. And then we allow mine planning and modifying factors to determine a reserve from that. In terms of what goes into that dollar per ounce cost, it's all the exploration costs, the drilling, the assaying and the labor to come with that figure.

Thank you. Great. Thanks, Terry. From Catherine Cunningham at JPMorgan, she says, with the reserve price increasing to $1,400 an ounce to what expect -- to what extent do you expect an increase in total cash costs from lower cutoff grades.

No. We actually probably expect -- let me back track. The reason why we did this is because in discussions with the technical experts, we were now running the risk in our buy plans to sterilize resources. When you have what would be from $1,200 a $650 cap between the spot price and 1200, the risk that you sterilize resources, let's say, at 1,350 that are still very high margins. what you penalize it is -- that's really far from optimal. So, this is a movement more to optimize, but still being very conservative. We are below the average of our competitors. So, I think this is the -- we thought about this loan where there was a lot of sort of effort and study going into this. And I think it's the right, if I say, not conservative, but optimal move for my planning.

Great. Thanks, Alberto. I think with apologies for any outstanding questions we've run up against time, but I'm going to hand over Claudia to you just to -- or in fact back to you, Alberto just for some closing comments.

Look, I just want to reflect sometimes we don't on the year that passed. I know that the market looks for the future and rightfully so. But the year that passed, we're quite an operon quite proud of what the team delivered we delivered -- we would be probably one of the few companies to not change guidance this year. We delivered production on guidance. We delivered cost from guidance. We actually decreased our all-in sustaining cost by 10% in real terms, which is not a minor-feet. And we did this with the most important metric of the world, which is safety. Our people were safe. We have the lowest write-down in the industry trip that 1.28. The average in the industry would be 2.7%. And so, what else can you ask a team and I'm really grateful and proud of it production volume cost all itself. 23 was always a transition year. I can understand, I've read some of the analysts already say, well, we expected a bit more reduction in cash cost. It's -- we are coming from a very high base in '22.

This is a transition year. We are starting to see the planet of asset potential, but the full benefits you will start to see in '24 and '25. And so, we just stick to our strategy, it's working. It's -- and we believe that we create the most value for our shareholders internally. So, thank you.

Thanks, Claudia. Thanks, everybody.

Thank you very much. Ladies and gentlemen, that does conclude today's call. Thank you for joining us. You may now disconnect your lines.