Feb 16, 2017
Executives
Nicholas Holland - CEO
Analysts
Operator
[Call starts abruptly]
Nicholas Holland
With me today are our CFO, Paul Schmidt; Nico Muller, EVP for the South Africa Region; Stuart Matthews, Executive Vice President for the Australia Region; Richard Butcher, Executive Vice President of Technical for our group and Avishkar Nagaser, Investor Relations Executive Vice President. Before we start, let me mention the tragic fatality we had at South Deep today.
This is the second fatality we have had at the mine so far this year. Obviously it's a severe setback after we have reported some significant improvements over the past few years in our safety record.
We are resolved to address the underlying causes to these accidents and to again improve our safety, which is obviously fundamental to our business and is a high moral requirement. During 2016, we achieved a number of our strategic objectives including improving safety, achieving our guidance for the fourth year in a row, generating strong net cash flow, deleveraging a balance sheet and growing the dividend in line with higher normalized earnings.
In addition, we are investing in the future to allow us to continue to deliver and grow sustainable free cash flow for years to come. For the year under review, both production and cost beats original guidance with attributable gold equivalent production of 2.146 million ounces, largely flat year-on-year at all-in sustainable costs of $980 per ounce, which compares to $1,007 in the previous year and all-in cost of $1,006 per ounce and that compares to $1,026 an ounce in the previous year.
Our focus on generating free cash flow yielded positive results again in 2016 with the eight mines in the group generating net cash flow of $444 million, compared to $254 million in 2015. Now, that cash flow is after all capital expenditure, taxes royalties, G&A -- in other words, everything.
A significant driver of the increase in net cash flow was South Deep achieving a full net cash inflow for the full year of $12 million and that's the first it has achieved that compared to an $80 million outflow in the previous year. The strong cash generation has enabled us to further improve our balance sheet by reducing our net debt by $240 million during the year, reducing it to $1.16 million at the end of 2016.
Net debt to EBITDA as of December 31, 2016 was 0.95x, surpassing our target of 1x. It is worth highlighting that this improved balance sheet has been achieved even after the $197 million payment to Gold Road for the acquisition of 50% of Gruyere gold project.
In-line with our trading statement, there was more than a threefold increase in normalized earnings for 2016 to $191 million or $0.24 per share. This increase in normalized earnings has enabled us to declare a final dividend of ZAR0.60, which takes the total dividend for 2016 to 110.
In 2017, we will continue to drive operational excellence, but in addition, we will increase our focus on setting up the business for the future. With various new growth and development projects, we have entered the next cycle in our evolution.
This focuses on reinvesting in a business and our future to target both continuing and increasing free cash flow for the benefit of all stakeholders. At the end of 2016, we announced our joint venture with Gold Road to develop and operate the Gruyere gold project.
We have taken out a management in February 2017 and we expect the production should start in later '18, early '19. Last year also saw the decision on the reinvestment plan for Damang, extending the life of mine from 2017 to 2024 with clear upside there.
In Chile, the Salares Norte project has achieved a key milestone of receiving government approval for sufficient border rights [ph]. The project is on track to complete pre-feasibility study in the second half of 2017.
As of this point in time, we're sitting on resources of 4.4 million gold equivalent ounces, of which more than half is in the indicated category. In addition, we will continue to invest in brand brownfields exploration in Australia and positive results have been obtained at both St Ives and Granny Smith in the course of 2016 where we more than replace depletion over the year.
We have also announced the long term build up plan for South Deep. The miners are expected to ramp up to steady state production of around 500,000 ounces per annum over the next five years at an all-in cost of debt full production level of around $900 per ounce in today's money.
Investment such as these do not mean that our strategy has changed. We remain focused on generating cash in order to reduce our debt, pay dividends to shareholders and share the value we create with employees and host communities.
We are guiding for almost unchanged production levels for 2017 between 2.1 and 2.15 million ounces. Our all-in sustainable cost is expected to be mostly higher between $1,010 an ounce and $1,030 per ounce as compared to the $980 per ounce in 2016.
Given that we are planning for significant investments this year at Damang [ph], South Deep Gruyere and Salares Norte, our all-in cost will be higher at between $1,107 per ounce and $1,190 per ounce. And with that brief summary, we'll now take questions which either my colleagues or myself will endeavor to answer.
Thank you.
Operator
Thank you. [Operator Instructions] It seems like there are no questions on the conference call.
Nicolas Holland
Good. Well, in that case, for those people who did dial in, we appreciate your time and I'm sure that we'll talk to you again in the near future.
And with that we'll say goodbye.
Operator
Apologies, there seem to be one question on the line.
Nicholas Holland
Go ahead.
Operator
Our question is from Sergio [ph] from JPMorgan.
Unidentified Analyst
Thanks a lot. This is Rafael [ph] from JPMorgan.
I thought I might as well give you there some company. I guess I'm talking from the credit perspective.
I was wondering if you can just give us some thoughts on given the fact that you delevered now down to less than 1x net debt to EBITDA, but obviously now your CapEx spend is going up. Can you give us some idea about where you should -- I mean assuming gold prices stay around to where also 25 level and given the guidance that you have, what levels are you expecting at the end of this year and what kind of -- do you expect to get any free cash flow or are this going to be a cash year for you?
Unidentified Company Representative
The net debt EBITDA should be as what process as of today shipping out 1.5x and at that no, we won't make cash for this year. The core business will make and those of existing operations that obviously we've got the heavy investment into the three projects that Nicolas has talked to.
It's about 1.5x net debt to EBITDA at the end of the year.
Unidentified Analyst
And do you think that I guess the investment cycle is fairly heavy this year? I guess a little bit lighter, but it's still on the heavier side mix and you start getting inflow on the return on investment 2019.
So this 1.5x, you think is this a peak level? Do you think it may creep up more [indiscernible] prices?
Unidentified Company Representative
There will be good -- remember the spin next year is lower and that spot -- we turn positive next year again marginally, but the peak is at the end of this year.
Unidentified Analyst
Got it, okay. That's the only question I had.
Thanks a lot.
Operator
Thank you. We don't have any other questions on the line.
Nicholas Holland
Okay, thanks. Then we'll close the call.
Thank you very much, everybody. Have a good day.
Operator
Thank you ladies and gentlemen. That concludes today's conference.
You may now disconnect your lines.