Kinross Gold Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 9, 2023

There are 12 speakers on the call.

Operator

Welcome to the Kinross Gold Third Quarter 2023 Results Conference Call and Webcast. I would now like to welcome Chris Lickenholt, Vice President of Investor Relations to begin the call. Chris, over to you.

Speaker 1

Thank you and good morning. With us today we have Paul Rollinson, President and CEO and from the Kinross Senior Leadership team, Andrew Freebrough, Claude Schemper, Both Dunford and Chuck Gold. For a complete discussion of the risks and uncertainties, which may lead to actual results differing from estimates contained in our forward looking information, Please refer to Page 2 of this presentation, a news release dated November 8, 2023, the MD and A for the period ended September 30, 2023 our most recent filed AIF, all of which are available on our website. I will now turn the call over to Paul.

Speaker 2

Thanks, Chris, and thank you all for joining us. This morning, I'll provide an overview of our Q3 and update you on our ESG initiatives. I will then hand the call over to Andrea to discuss financial performance, Claude to highlight our operating performance and Will to discuss our projects. Our operations continued to deliver strong performance in the 3rd quarter and we remain well positioned to meet our full year guidance. Our focus on delivering on our targets continues to drive strong results.

Speaker 2

By the end of Q3, we had produced just over 3 quarters of our full year production at costs that are tracking in the lower half of our guidance range. Our business is performing well and we generated strong cash flow. In the 1st 9 months, we generated nearly $1,200,000,000 of operating cash flow. And after reinvesting in our operations and project pipeline, We generated over $400,000,000 of free cash flow. With respect to our operations, In the Q3, Tasiast, Paracatu and La Coipa all continued to deliver excellent results, accounting for approximately 70% of our production with an ASIC of just over $1,000 per ounce.

Speaker 2

CASSIUS had a record production quarter Producing 171,000 ounces was once again our highest cash flow operation. Paracatu also performed well in the Q3 and as planned at its highest production quarter of the year. Coipa was once again our lowest cost operation and also generated strong cash flow. Switching to the U. S.

Speaker 2

Our operations performed well with production at each site higher than the prior quarter. Fort Knox had a strong production quarter, while also making mill modifications to accommodate a higher grade man show ore. We recently celebrated the commencement of mining activity in a groundbreaking ceremony with the local native village of Catlin and the Governor of Alaska. Manchow remains on budget and on schedule to begin contributing ore to Fort Knox in the second half of next year. At Round Mountain, work has progressed on several fronts.

Speaker 2

As outlined in our release, We are pleased to report that we have now approved Phase S, making the future at Round Mountain more clear. Our plan is to progress from the current Phase W to Phase S, which is the next phase of open pit mining. These two phases will take production at Round until the end of the decade. In addition to Phase S, We also see potential to add higher grade underground ore first from Phase X and later from Gold Hill. You'll hear more on this later from Will.

Speaker 2

At Great Bear, we continue to make strong progress in the Q3. Reservoir's definition drilling is ongoing with 11 rigs currently operating on-site. We are seeing excellent results from our directional drilling program, which is allowing us to increase our underground resources more cost effectively. As I noted last quarter, we are expecting a meaningful increase to the LP underground resource as part of our year end update. Additionally, directional drilling and other areas of mineralization are also showing promising signs of growth.

Speaker 2

In particular, at the hinge zone located adjacent to the main LP zone, A recent high grade intercept returned 2.8 meters true width with grades of approximately 2 60 grams per tonne at a vertical depth of 8 70 meters. At the Great Bear project, We have both our provincial and federal permitting process. In the Q3, we continue to progress studies and provincial permitting for the advanced exploration decline, which is what we refer to as the AEX. With respect to the main project, we progressed permitting with IAC, Impact Assessment Agency of Canada on federal matters. We are continuing our work on environmental baseline studies applicable to the main project, as well as indigenous consultations.

Speaker 2

We also continue to advance technical studies, including engineering and field test work. We plan to provide an update on this work in the form of a preliminary economic assessment or PEA in the second half of next year. I'd like now to switch gears and highlight some of our latest work at ESG. In the Q3, we advanced our ESG efforts across 3 main areas. Number 1, We completed a comprehensive review of our community management system, leading to the development of a new social performance management system for implementation at all of our operations.

Speaker 2

2, we advanced our natural capital strategy focused on land use, water management, biodiversity, air quality, Waste Management and Reclamation. And 3, we continue to deliver on our climate strategy. Construction of our 34 Megawatt solar facility at Tasiast is nearly complete. For context, 34 Megawatts of clean energy will reduce our carbon emissions by over 500,000 tons over the current life of mine. This project is one of the key contributors to achieve our 2,030 emissions reduction goal.

Speaker 2

So to recap, with strong year to date performance, we are well positioned to meet our guidance. With our projects at Tasiast and La Coipa complete, we look forward to these assets continuing to generate strong cash flows. Our financial position has strengthened as we have continued to repay debt. We continue to return capital through a competitive dividend And we are advancing the next round of projects that will contribute to our future. With that, I will now turn the call over to Andrea.

Speaker 3

Thanks, Paul. I'll discuss financial highlights from the quarter, provide an overview of our balance sheet and comment on our guidance and outlook. As Paul noted, our strong performance continued in the quarter with production on track for 2,100,000 ounces and cost tracking in the lower half of our guidance range. In Q3, we produced 585,000 ounces Anchored by strong production from our 2 top tier assets, Tasiast and Paracatu, continued solid performance at La and increased production over the prior quarter at each of our U. S.

Speaker 3

Sites. Gold sales of 571,000 ounces are slightly above production due to timing of sales. In Q3, our average realized gold price was $19.29 per ounce in line with the average spot gold price. Cost of sales of $9.11 per ounce in Q3 was relatively stable with the prior quarter. Cost of sales at Tasiast, Paracatu and La Coipa averaged $7.35 per ounce, once again underpinning strong performance and free cash flow.

Speaker 3

Margins were strong in Q3 at $10.18 per ounce sold. All in sustaining costs were $12.96 per ounce in Q3, which was in line with the prior quarter. Year to date cost of sales of $9.31 per ounce were below the midpoint of our full year cost guidance range. Costs are expected to increase in the Q4, primarily due to lower expected grades at Paracatu as a result of planned mine sequencing. For 2023 as a whole, we now expect to finish the year in the lower half of our guidance range, so below $9.70 per ounce.

Speaker 3

In Q3, our adjusted earnings per share was $0.12 and adjusted operating cash flow per share was $0.38 Attributable CapEx in the Q3 was $272,000,000 We remain on track for our full year guidance, but we do expect to finish the year towards the top end of our range. Free cash flow for the quarter was $123,000,000 or $187,000,000 excluding working capital changes and over $400,000,000 for the 9 month period. Turning to the balance sheet, our financial position remains strong in the Q3 as we continue to delever. We ended the quarter with $465,000,000 in cash and approximately $2,000,000,000 of total liquidity. Our net debt declined during the quarter as we repaid $50,000,000 of the $100,000,000 outstanding on the revolving credit facility.

Speaker 3

Subsequent to quarter end, we repaid the remaining $50,000,000 balance. Our 12 month net debt to EBITDA ratio continued to trend lower as we finished the quarter at 1.1 times. As mentioned, following the 9 months results and a good start to Q4, we're in a strong position to achieve our guidance. I'll now turn the call over to Claude to discuss our operations.

Speaker 4

Thank you, Andrea. I would first like to begin by discussing the significant progress our team has made on our journey to a more progressive people centric health and safety philosophy in the last year. All our employees and business partners play a major role in shaping how we operate safely across our operations. Our homegrown safety excellence program stands out for its genuine bottom up approach, leveraging the collective experience of employees to foster a culture of ownership, collaboration and shared purpose. This has begun to influence how we operate and safety excellence is an integral piece of our operational excellence approach.

Speaker 4

Now moving on to Q3 and our operations. As Paul said, we are well on track to meet our annual guidance. Our expansion projects at Tasiast and Nicuipa are complete And all our mines are performing as planned. Tasiast delivered record quarterly production of 171,000 ounces at a cost Sales of $6.66 per ounce, benefiting from strong throughput and strong grades and recoveries as we continued Mining in the higher grade section of West Parash IV. We remain on track to achieve our full year production guidance in the range of 610,000 ounces at cost of sales of $6.80 per ounce.

Speaker 4

Construction at the solar power plant is nearly complete And we are on plan for 1st power to the grid by year end. Installation of the photovoltaic panels, inverters and transformer stations are now complete. And the battery system installation is well progressed. Electrical works and the completion of the grid connection are continuing with pre commissioning testing underway. Paracatu had a strong quarter producing 172,000 ounces at a cost of sales of $8.45 per ounce.

Speaker 4

As indicated, 4th quarter production at Paracatu is expected to be lower and costs slightly higher due to the location of mining in the pit. We remain on track to achieve our full year production guidance in the range of 580,000 ounces at a cost of sales of $8.90 per ounce. At La Coipa, strong operating performance continued during Q3, driven by strong grades and recoveries. Pacoipo was the lowest cost mine in our portfolio in Q3 producing 66,000 ounces at a cost of sales of $6.29 per ounce and contributing strong free cash flow. We remain on track to meet our full year production guidance in the range of 240,000 ounces And costs are tracking below our guidance.

Speaker 4

Now moving to the U. S. Operations. Production improved over the prior quarter at each of our sites, while costs remain in line. We remain on track to achieve our full year guidance range of 670,000 ounces at a cost of sales of $13.70 per ounce.

Speaker 4

Beginning with the Fort Knox operations, Q3 production of approximately 72,000 ounces was slightly higher quarter over quarter. At Manzhou, activities remain on schedule and on budget and we are on track for initial production in the second half of next year. Construction is now 90% complete with commissioning activities well underway as well as the preparation to transition the project to operations. Construction on the mill modifications at Fort Knox to process Manchow Oil is progressing on plan All the concrete works now completed and work now progressing primarily inside the mill on tanks and piping components. Further work is scheduled to take place over the next several months per plan ahead of production in the second half of next year.

Speaker 4

At Bald Mountain, production of approximately 41,000 ounces improved over the prior quarter as a result of higher heap leach stacking rates as ore mining activity ramped up considerably against the Q2. At Round Mountain, Production of approximately 64,000 ounces was higher over the prior quarter

Speaker 2

with the

Speaker 4

milling of high grade ore from Phase W2. Costs at Round Mountain were better than initially planned due to favorable grades, stacking rates and the timing of the leach inventory. With that, I will now pass the call over to Will.

Speaker 5

Thanks, Claude. I'll start by discussing Round Mountain and then provide updates at Curlew and Great Bear. As Paul mentioned, we have approved moving forward with mining at Phase S, securing meaningful production scale at Round Mountain through the end of the decade.

Speaker 4

As you will recall, we made the decision at

Speaker 5

the end of last year to defer the mining of Phase S given our focus on ensuring strong economic margins and returns on our capital investments. Since that time, we have been working on optimizing the design and are pleased with the outcome of that work, which has yielded a lower strip, higher grade and significantly lower CapEx plan. This was achieved by stepping in the pit design, Removing higher strip lower margin ounces and by identifying opportunities to add some near surface lower strip ounces earlier in the mine sequence to offset our stripping costs. This optimized design has yielded a high return resilient opportunity To provide clarity around our mine plan sequence at Round Mountain, we are mining W2 now We'll see similar production next year before W2 starts to taper off and Phase S starts to ramp up in 2025. By 2026, we will be at full production of Phase S and will continue to produce through the end of the decade.

Speaker 5

We anticipate adding approximately 750,000 ounces of total production from Phase S. The combination of W2 and Phase S are expected to average production of 215,000 ounces annually over the 24 to 28 timeframe. As we continue to mine these open pit phases, we are focused on exploring and studying our higher grade, potentially higher margin underground opportunities at PhaseX and Gold Hill. We see potential for PhaseX to come online in late 2026 or early 2027 Gold Hill to come online towards the end of the decade. The exploration decline at Phase X is progressing well with approximately 1,000 meters developed to date, keeping us well on track to start definition drilling early next year.

Speaker 5

At Gold Hill, we will continue drilling in Q4 of this year and into next year. Moving to curlew in Washington State, in Q3, we intersected a new vein zone as we continue to follow the interpreted paleo surface to depth. You can see this intersection on the slide, hole 1168, which returned 14 meters at 16.5 grams per tonne. While it is only one hole, this Intercept is both wider and higher grade than our existing resource, which we can see on the slide higher up to the left. The existing resource averages just over 6 grams per tonne and is generally narrow vein, offering potential to add production to our portfolio later in the decade.

Speaker 5

Exploration next year will focus on the wider and more continuous areas in our existing resource and we'll follow-up on the new zone of higher grade mineralization that we recently intersected. Moving on to Great Bear, in Q3, we moved 1 of our 6 directional rigs Across from LP to the Hinge zone, which as Paul indicated, results in the highest grade intercept we have seen since acquiring the property, showing approximately 260 grams per tonne at a mineable width of 2.8 meters. The hinge zone, which is Classic Red Lake style mineralization is approximately 700 meters away from the LP zone and we expect to be able to easily access it from our exploration decline, which will be located midway between the two. This high grade intercept at approximately 8 70 meters vertical depth is about 600 meters below our inferred resource. Along with other drill results, this confirms our view that In addition to the high grade intercept at Hinge, You can see on the slide our latest intercepts at the LP zone where the other drill rigs have been primarily focused.

Speaker 5

Directional drilling has increased the density of our intercepts at depth, allowing us to target a meaningful addition to the underground resource.

Speaker 4

We continue to

Speaker 5

see wide high grade mineralization reinforcing our thesis that this system continues at depth and provides potential for a high productivity long life mine. We will be updating our resource estimate on the back of this drilling in our year end update in February. In addition to the drilling campaign, we are advancing in 2 key areas at Great Bear. The AEX declines through which we will be able to complete definition drilling at depth and bulk sampling and the main project which includes the mine, mill and related infrastructure required for production. For the AEX decline, feasibility level design and engineering is now complete.

Speaker 5

You can see the surface design for AEX here on the slide. Provincial permitting is on track and procurement for long lead items such as the camp, Our infrastructure and water treatment is underway. Surface construction is planned for the second half next year. For the main project, design and engineering is well underway. Baseline studies and field work campaigns are also progressing well.

Speaker 5

Notably, we have progressed an extensive test work program of soil and overburdened geotechnical conditions to provide increased certainty as we progress the design of our project infrastructure. The recent Bedrock geotechnical drilling has also continued to demonstrate Permitting work at the main project is ongoing. We expect to release a PEA in the second half of next year. In summary, we are excited by the continued success of our drilling campaign and by the progress we are making to bring this cornerstone project into production. I'll now turn it back to Paul.

Speaker 2

Thanks, Will. In closing, We have delivered a strong Q3 and 1st 9 months and we are well on track to meet our annual guidance. Looking forward, we are excited about our future. We have a strong production profile. We are generating significant cash flow.

Speaker 2

We have an investment grade balance sheet. We have an attractive dividend. We have an exciting pipeline of opportunities and we are very proud of our commitment to responsible mining and has made us a leader in ESG performance within the industry. With that operator, I'd like to open up the line for questions.

Operator

We'll pause for just a moment to compile any questions. Our first question comes from the line of Ralph Profiti with 8 Capital. Please go ahead.

Speaker 6

Thanks very much, operator. Good morning, Paul. I'd just like to ask your team to elaborate a little bit on the stepping in of the pit design at Round Mountain to access and bring down that strip ratio. Just wondering is this a result of increased confidence in Some of the slope characteristics and maybe can you just describe the work that's being done in that area and potentially would be useful to have what impact that had on the overall strip ratio?

Speaker 2

Sure, Ralph. Good morning. Thanks for the question. Yes, look, the team has been heads down and does some really Good optimization work in the last several months and has come up with a really Robust outcome. And I'll let Will speak in a little bit more technical detail to what we did, what we're thinking differently.

Speaker 5

Yes. So we have done a lot of work on Geotech in terms of just increasing our confidence, but we haven't changed the slope parameters that we're using. So the overall slope angle is still similar to the old Phase S. Really what it was, as you can see in the diagram on the slide, It's just stepping in the back of it in areas where the strip ratio and the grade resulted in the lowest margin kind of increment of that pit. And at the same time, we managed to identify through drilling and some work by the technical teams some opportunities to bring in some lower strip ratio material.

Speaker 5

So that's regard total strip ratio down from about 2.3 to 2.1 that you see in the press release.

Speaker 6

Yes. Thanks again. If I could switch to directional drilling at Great Bear. Are you looking at going deeper and extending both the vertical and horizontal reach of that? And maybe you can elaborate a little bit more on where Specifically, you're targeting the areas for directional and perhaps what also are the targeted depths?

Speaker 2

Sure. Yes, look, I mean, obviously the transition here, Directional Drilling has worked great for us In part due to the competency of the rock, not all material holds up to directional drilling. It's working really well for us here. And as we've said, we're It's become very cost effective in a way to increase density underground. There are limits and part of the transition here is to is why we're looking to get that decline started And do more drilling underground as we get the decline advance.

Speaker 5

Yes. So we have 5 rigs right now that are really focused on what we're overall Calling the LP zone, so that's Yumu Yaro, kind of the key part of the ore body that we've drilled off. So 5 out of the 6 directional Drill rigs are primarily focusing between 500 and 1,000 meters there where we're building out our resource. We are obviously as you've And some of the drill highlights, we are doing some deeper drilling as well just to prove the thesis. But we're really focused on that 500 to 1000 meter because that's Kind of the next decade of the mine plan and we want to understand that as we design our infrastructure.

Speaker 5

We did, as we noted in the press release, take 1 rig In this quarter and take it across to the hinge area, that's the higher grade Red Lake style mineralization. And we've used that rig to drill out deeper as well there and we're going to be trying to build out some resources there.

Speaker 2

That

Speaker 5

sufficiently does that give you a good picture.

Speaker 6

Excellent answers. Thanks very much.

Operator

Our next question comes from the line of Anita Soni with CIBC World Markets. Please go ahead.

Speaker 7

Hi, good morning guys. Thanks for taking my questions. So, I'm going to focus on the Round Mountain Phase S. And I see you've got a presentation or Slide 19 that gives a little bit more color on the production profile. But could you break out for me because I went back to the reserves and resources last night and I Couldn't really figure out exactly what was happening there, but what is the grades and tons for Phase S and what's the grade and time left W-two, you can do it as of 2022 year end, if that's useful.

Speaker 5

As of 2022 year end?

Speaker 7

Well, I'm assuming I mean, the one that you've got public, right? I just need the breakout of the public Resources.

Speaker 5

In terms of what's in phase, I believe it's around 800,000 ounces. Yes. So we've got around high-8s, I believe is what it is in the Phase S resource, close to 9. We can follow-up with the exact grade.

Speaker 7

And the grade?

Speaker 5

The grade up phase in the resource.

Speaker 7

Well, the reserve ideally, because you said you put it in reserves, Right, as of year end 2022.

Speaker 5

Yes, I think it was in that Close to 0.6 gram per tonne range, but we'll follow-up with the exact mix.

Speaker 2

It's a mixture of mill and leach. Yes. I'll break that out, but Probably the 1 on the mill and closer to 0.4 on the leach, but in that ballpark.

Speaker 5

Yes, it's sort of 0.8 and yes, Exactly. We can follow-up with what was in last

Speaker 7

year's results. Yes, that was more confusing than that answer was. Sorry, I didn't, wasn't clear. So 0.8 on the mill and 0.4 on the leach, is

Speaker 2

that what it is? The

Speaker 5

current grade for the mill at Phase S is 0.8 and the leach is 0.5. But we'll follow-up on exactly what it was in the reserve last Obviously, our current design is slightly different than that reserve.

Speaker 7

Yes. What I'm really trying to drive at is how much of base W is left And what do we like when you're at you're showing us the incremental. I just need to know what the numbers are For the actual

Speaker 5

We'll have about 150,000 ounces left at the beginning of next year in Phase W. That's in the ground, but obviously ending our final reserve update this year. There's also W3, which is still in reserve, which is a significant number of ounces. And overall, the site itself, Excluding phase add, just W and the leach inventory and some other cleanup areas is about 400,000 ounces. So we've got if you're just looking at kind of Phase W, that's plus the remaining leach tail, etcetera, that's about 400, About 150 of that is still in the ground at end of year.

Speaker 5

And then you've got an additional 750 coming on From what we've just released regarding Phase S, you still got somewhere around 800, but final reserve will confirm in Phase W3.

Speaker 7

Okay. So I think we'll probably take it offline, but can you tell us what the CapEx spend over 2024, 2025? Like you've given us the overall lump sum, but Mentioned that there's a deferral of capital that basically allowed this to be approved. So I'm just wondering What's the cat like the cadence of the cat, the $140,000,000 or $170,000,000 is?

Speaker 5

Like how it's broken down, are you asking?

Speaker 2

Yes, every year. How much

Speaker 7

are you spending on Phase S?

Speaker 5

Yes, we're spending $125,000,000 next year on Phase S in terms of capital. About $115,000,000 of initial capital and another $10,000,000 in sustaining. And then in 2025, we'll be spending $60,000,000 in capital.

Speaker 3

I would just add Anita that these numbers are sort of within the kind of $1,000,000,000 range of capital we've been talking about

Speaker 7

Yes. I mean, I took a stab at it last night to try to add this, but key pieces of information were missing. So I Sort of, I need those pieces to be able to give you the credit for it. So, and then moving to Great Bear, Could you remind me with the overall results that you've just delineated there, I mean, You said you're expecting an increase in reserves at the LP fault. Could you give us sort of a ballpark figure on what you think that you could

Speaker 2

All we've said, Anita, and we said it on the last call, As the directional drilling has increased the density, we are expecting to increase Our resource is at depth in the LP zone and we'll give an update at the end of the year. I think we kind of notionally directed towards at least 500,000 ounces. But As the work continues, the density of drilling continues. As you can see from the results, as we tighten up that drilling, That will help support that increase in the underground resource.

Speaker 7

Okay. Thank you. Thanks for taking my questions.

Operator

Our next question comes from the line of Carey MacRury with Canaccord Genuity. Please go ahead.

Speaker 8

Hi, good morning guys. I'm just wondering if you could it's good

Speaker 9

to see the uptick at throughput at Tasiast and to clarify. Just wondering how those ramp ups are going in Q4 and what sort of run rates you're seeing now?

Speaker 4

Yes. So, Kerry, At Tasiast, you've seen the increased throughput. We're focused on maintaining the deliverable towards the end of the year with our progress towards 24,000 into the new year and full year for next year. At La Coipa, we've steadily been improving both stacking rates and milling rates in the filtration piece. And October was a really good month for us at an average of over 13,000 tonnes a day.

Speaker 4

So we're as Paul alluded to, We consider now both Stasiast and the Quipa projects complete as those mines now sustain It's inputs and build a mine plan around what's feasible for particular time of the year.

Speaker 9

Well, Tasiast, should we be assuming something in the 2021, 2022 range for Q4?

Speaker 4

Absolutely.

Speaker 9

Okay, great. Then maybe just on the 2021 guidance, You're tracking kind of above the $2,100,000 ounce mark. Just wondering if you could just how should we think about Q4 in terms of like which assets You're going to come off a bit and which ones are going to be stronger? Any guidance there would be helpful.

Speaker 2

Yes, Terry, it's Paul here. Yes, good question. I mean, look, we were just reiterating our guidance here. We're solidly On track for guidance, certainly as it relates to production, probably going to be In a little lower probably in the lower half on cost and maybe in the upper half on CapEx. But we're our intention is to land on 2.1 as guided for the year.

Speaker 4

Gary, if I might add, just we did note in the call that Barricka 2 will be slightly down in the 4th quarter because where we are. We expect Tasiast to be on track, Port Knox will be on track and Round Mountain will also be a little bit down due to As we head into the stacking in the winter now.

Speaker 9

Great. Thank you very much.

Speaker 2

Our

Operator

next question comes from the line of Josh Wolfson with RBC Capital Markets. Please go ahead.

Speaker 10

Yes, thanks very much. I had a question regarding the implications of Phase S for Round Mountain and I guess what it would mean for the Existing 3 year guidance that was issued, I guess part of it was addressed. I just want to maybe clarify a couple of things. On the production, there's been a number provided on average for a 4 or 5 year period. I'm just wondering is that production reasonable to expect over the next 2 years outstanding for the 3 year guidance?

Speaker 10

And Just going back to the capital, given that capital was is tracking high this year, inflation is still present and then The new CapEx, are we still comfortable with that $1,000,000,000 target? I think there was this comment beforehand that suggested that. Thank you.

Speaker 5

Yes, you can see on Slide 19, we've given a bit of a guidance as to where the production moves at With Phase S included into the plan, so you can see that there isn't a significant within the 3 year guidance period we've provided, there's not a significant contribution yet from Phase S And not one that moves the needle enough that we're changing guidance today. And you can also There's a bit of a depth to the $215,000,000 over the 4 year period that we gave. Obviously, it's slightly variable. You can see next year, we're planning to see similar production scale to this And then dipping down in 2025 as we continue to pull off the leaches and finish up at W2 and start to ramp up activities at Phase S. So that and then we'll recover that over 200,000 ounce mark in 2026 forward.

Speaker 3

On the CapEx guidance, I did allude to that in earlier I'll comment that we still expect to be somewhere around $1,000,000,000 range in 2024, but I'd just caveat by that by saying We're just in our budget process now, so but we should be in a $1,000,000,000 neighborhood.

Speaker 10

Good. Okay. And then for Mancio, just sort of addressing some of these media reports and legal items, Is there any sort of timeframe we can expect to receive an update there?

Speaker 2

I think nothing more than what we've said really, Josh. I mean everything is on budget, on track. As we said in our remarks, we actually had a groundbreaking ceremony with the local community, the governor of the state. It's everything's in good shape and moving ahead.

Speaker 1

Okay. That's good to hear. Thank you very much.

Speaker 7

Thanks.

Operator

Our next question comes from the line of Tanya Jakusconek with Scotiabank. Please go ahead.

Speaker 11

Good morning, everybody. That's me, I think. So I just have a few questions, if I could, just some follow-up. I'm going Just on Round Mountain, again, this phase S when and I appreciate you giving us the Slide 19 to show us the production profile. But maybe from a high level, when you said lower strip and that's going to help on the cost side, maybe directionally from a high level, What improvements have you seen on costs?

Speaker 11

Is it 10% 20% just directionally so we have an idea as best as we can with the information?

Speaker 5

Yes, it reduced about a third of our strip. So it reduced about $80,000,000 worth of kind of upfront CapEx cost as compared to what we were Considering last year, you can see in the table that what we see as the go forward CapEx and some of what I outlined for Anita.

Speaker 3

Okay.

Speaker 5

So that is down. The CapEx is roughly down a third. You can see where it's at now.

Speaker 11

Yes, Yes. No, I was just more focused on the operating costs, but yes, I saw the CapEx.

Speaker 3

On cash costs, Tanya, we are expecting cash costs for 24 to be similar to this year and then 25 and then phase that will help lower those costs. Yes.

Speaker 11

Okay. When you say, Andrea, 2024 similar, are you meaning similar overall company In 2024 to 2023 and then are you just saying 2025 overall consumptions or is it just around Mt.

Speaker 5

And the really positive thing, Tanya, is with that lower CapEx and the change in the strip ratio, although the cash cost will be staying similar over the next couple of years, there's actually enough free cash flow coming out of Phase W Even at the 1850 that we kind of run our analysis out for this to fund the pre strip of Phase S, so to fund that 125 next year and then 60 the following year.

Speaker 11

Okay. Thanks. And then my second question It has to do with Great Bear and Carlos. So just looking at Great Bear and just looking at the longitudinal and Seeing that this drilling continues to go deeper and the grade continues to improve and I appreciate, Paul, you said that Thought in the last conference call, we said between 500,000 ounces added to the resource and for the underground. I'm just wondering if because of grade is appearing to be better, obviously better grade is going to help This resource number, are you thinking that we are going to be toward the upper end of that range?

Speaker 2

I think Daniel will stick with the highly confident on 500 and I'm expecting we'll do better, but I don't really I don't want to speculate at this point. I think what's clear to me here is this directional drilling is really filling in the panel. And what we've got here is a really attractive open pit, high grade open pit, which will have Great cash flow. And now the underground, as was our thesis, is filling in quite nicely. So you can kind of see Phase 1 of the mine, Followed by the underground, now starting to show that the Hangeland Red Lake style mineralization continues at depth, so we'll have a Hi, great feed.

Speaker 2

It's all coming together really well. But the point I think we were trying to make is The efficiency is great, but there comes a point where I'm not sure it makes a lot of sense to keep punching down below 1 kilometer. Everything is going full speed ahead with the decline. As we said, we expect to begin early works Next year, once we get the decline down, we'll do more definition drilling from there as opposed to farm surface.

Speaker 11

Yes. Now that makes sense. And maybe just, has your thought process changed? You're getting a lot of visible gold I see there And the slide 21, just changed at all on the capping factor that you're going to be using? Has that changed at all?

Speaker 11

And just remind me How you've been thinking about these high grade results and sort of what are we capping?

Speaker 2

Yes, I think your good observation, we are seeing a lot of visible gold. My expectation is that that will ultimately drive a positive reconciliation, But it's a Hollywood problem.

Speaker 11

Absolutely. At 2 60 grams per tonne. Okay. Maybe my last question, just if I could move on to a curlew. Can you just remind me what's our expectations?

Speaker 11

You got another good Drill results again higher grade, that's what you have in the overall resource. Can you just remind me what we're expecting

Speaker 5

Yes, we are expecting to Yes. An increase in our resource, obviously, that's going to come out fairly shortly. But it is we're hoping to be And that overall between inferred and indicated to be around that 1,000,000 ounce mark, maybe a little bit higher. But obviously February is where the work will come to fruition and gives you a firm number of the increases that we've seen there. Obviously, that new drill hole, We're not expecting to have a resource around that by year end.

Speaker 5

That's one hole at the bottom of the paleo surface there. So that's going to take follow-up work At the end of this year and into next year before we can pull that into a resource.

Speaker 11

Okay. And that's what I was trying to understand whether that could be pulled in. Okay. So that one's not pulled in, but you're expecting an overall increase or in the resource from the other lower grade holes that you have outlined there?

Speaker 5

Yes, we are. We've had some other good intercepts higher up in the area of our resource, particularly around K5, which you can see on the page in the press release, Where we kind of have some of our better mineralization in the existing resource. So we do expect a positive update on the resource there.

Speaker 11

Okay. Okay. Thank you so much. I'll leave it to someone else to ask questions. Appreciate you answering my questions.

Speaker 2

Thanks, Tanya.

Operator

Our next question comes from the line of Mike Harkin with National Bank. Please go ahead.

Speaker 8

Thanks guys and congrats on the solid quarter. Most of my questions have been answered. Just wondering the Phase S having to build another pad, Are you fully permitted for all that or is there any kind of permitting to kind of get completed to Further de risk that optimize Phase S?

Speaker 5

No, we already have our federal permits for Phase There's no significant permitting that's required. The small expansion on our existing NNED That was already planned as part of the old Phase W work. So no hurdles in the way there.

Speaker 8

And then just following up on Sandy's question on curlew, you're targeting to be over 1,000,000 ounces of total resource. Ultimately, is there an internal goal that you can share with us in terms of scale of a resource that would Kind of hit a level where you might see the pulling of the trigger of a restart? Or is it just kind of too early and we'll just have to wait for as these additional results continue to build the resource.

Speaker 5

I think as you've seen with our We've progressed at FaZe X, even just as an example over the last year and our focus on the underground at FaZe X, we're really focused on margins As a company and making sure we have a strong return on our investments. So it's not necessarily just a total ounces number. It is There's a lot of opportunity along that paleo surface. It's really about making sure that we can make money on the width and the grades We're coming through with the resource and we get the right mine design around it. So that's where the focus is in the PFS.

Speaker 5

It's really around the mine design and optimizing the cash flow on an annual basis that we can get out of it. There's no doubt there's long term potential from a resource perspective, But we need to make a cash flow.

Speaker 8

And have the results proven kind of Any kind of comment in terms of management expectations? Are you finding the Dura results are proving in line, little better than what you kind of thought When you've been expanding these zones?

Speaker 5

Yes. I mean, obviously, our Drilling is targeted to expand in the better areas. That's really what we focused on this year and we have seen some extensions in K5, but it's quite early. Just To wrap it up, I think it's we do need to follow-up on some of these really, really strong grades and wins. But we need to continue to do our work and we'll have more information I think next year as we complete our PFS.

Speaker 2

Okay. I think the key point here, our thesis was tracing that paleo line and That's gone very well. We had a thesis that the mineralization would basically follow that Paleo line And it has. We're getting good results. This last spectacular result was Ironically, the last call of the drill campaign this season, it's a good way to end the program, very exciting, but we've got more work

Speaker 8

Okay. Looking forward to more results from there. Thanks, guys.

Operator

There are no further questions at this time. I would now like to turn the call over to Paul Brolinson for closing remarks.

Speaker 2

Thank you, operator, and thanks everyone for joining us this morning. I understand it might be a busy morning out there. So Appreciate your time and your questions and we look forward to catching up with you in person in the coming weeks. Thank you.

Operator

I'd like to thank our speakers for today's presentation and thank you all for joining us. This now concludes today's call and you may now disconnect.

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Key Takeaways

  • Kinross delivered 585,000 ounces of gold in Q3, bringing year-to-date production to about 75% of its full-year target, with costs tracking in the lower half of guidance.
  • The company generated nearly $1.2 billion of operating cash flow in the first nine months and over $400 million of free cash flow, while reducing net debt and maintaining ~US$2 billion of liquidity.
  • Key growth projects are on track: the Tasiast 34 MW solar project nears completion, Manh Choh mine is 90% built for 2024 start-up, and Round Mountain Phase S received approval, extending open-pit production through 2028.
  • At the Great Bear project, directional drilling has boosted underground resource confidence and a high-grade hinge zone intercept (2.8 m at 260 g/t) supports a PEA slated for H2 2024.
  • ESG initiatives advanced with a new global social performance management system, enhanced natural capital strategy, and the Tasiast solar plant expected to cut >500,000 tonnes of CO₂ over its mine life.
A.I. generated. May contain errors.
Earnings Conference Call
Kinross Gold Q3 2023
00:00 / 00:00