Kinross Gold Q2 2025 Earnings Report

Kinross Gold EPS Results

• Actual EPS: $0.44
• Consensus EPS: $0.33
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $0.14

Kinross Gold Revenue Results

• Actual Revenue: $1.75 billion
• Expected Revenue: $1.52 billion
• Beat/Miss: Beat by +$231.28 million
• YoY Revenue Growth: +41.70%

Kinross Gold Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 8:00AM ET

Kinross Gold (NYSE:KGC) (NYSE: KGC) is a Toronto-based precious metals mining company primarily focused on the exploration, development and production of gold, with silver recovered as a by-product at some operations. The company’s activities span the full mining lifecycle, including discovery and resource delineation, mine construction and operation, ore processing, and eventual site reclamation and closure. Kinross sells refined gold produced at its processing facilities and manages associated logistics and processing arrangements to deliver metal to market.

Kinross operates a portfolio of producing mines and development projects across multiple regions, with a significant presence in the Americas and West Africa. Its operations include both open-pit and underground mining methods and are supported by regional exploration programs intended to extend mine life and identify new deposits. The company’s technical teams focus on ore extraction, milling, metallurgical recovery, and the implementation of capital projects to sustain and optimize production.

In addition to operational execution, Kinross emphasizes environmental stewardship, workplace health and safety, and engagement with local communities and stakeholders where it operates. The company pursues sustainability initiatives and regulatory compliance as part of its operating framework and reports on social and environmental performance through regular corporate disclosures. Kinross’s integrated approach combines exploration, operational management and corporate governance to develop and produce gold resources for global markets.

Kinross Gold Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Kinross produced 513,000 ounces of gold in Q2 at $10.74/oz cost of sales, achieving record margins and generating $647 million in free cash flow.
• Positive Sentiment: Ended Q2 with $1.1 billion cash and $2.8 billion liquidity, reduced net debt to ~$100 million (on track to be net cash in Q3), and returned nearly $300 million to shareholders year-to-date.
• Neutral Sentiment: Operationally, Paracatu led production with 149,000 ounces at $958/oz, Tasiast met its budget of 119,000 ounces at $843/oz, and La Coipa experienced groundwater inflows but remains on track to meet its annual guidance.
• Positive Sentiment: Key brownfield projects (Kerlu, Phase X) and greenfield developments (Great Bear, Lobo Marte) advanced with strong exploration results, supporting potential mine-life extensions and resource optionality.
• Neutral Sentiment: Reconfirmed full-year 2025 guidance of 2 million ounces at $11.20/oz cost of sales and $1,500/oz AISC, with second-half cost increases driven by mine sequencing, inflation and fixed-cost spreading.

Presentation

[Operator]

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold Second Quarter 2025 Results Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. It is now my pleasure to turn the call over to David Shaver, Senior Vice President. Please go ahead.

[David Shaver, SVP of Investor Relations and Communications at Kinross Gold Corporation]

Thank you and good morning. In the room with us today on the call, we have Paul Rollinson, CEO. From the Kinross Senior Leadership Team, Andrea Freeborough, Claude Schimper, Will Dunford, and Geoff 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 three of this presentation, our news release dated July 30th, 2025, the MD&A for the period ended June 30, 2025, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Thanks, David, and thank you all for joining us. This morning, I will discuss our second quarter results, provide high-level updates across our portfolio, comment on sustainability, and confirm our outlook. I will then hand the call over to the team to provide more detail. Following a good Q1, we delivered another strong quarter in Q2, establishing an excellent first half and positioning us well to achieve our full-year guidance. Our production in the second quarter was on plan, delivering 513,000 ounces at a cost of sales of $1,074 per ounce. Our strong production and cost management, combined with the gold price, resulted in record operating margins. As a result, we also delivered record free cash flow in the second quarter of almost $650 million and a first half total of just over $1 billion.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Our financial position and cash flow outlook remains excellent, and we plan to continue to return meaningful capital to shareholders through ongoing share repurchases and our quarterly dividend. With respect to our operations, Paracatu and Tasiast together accounted for more than half of our production and contributed significant cash flow. Paracatu delivered another strong quarter and was the highest producer in the portfolio, generating substantial cash flow. At Tasiast, we delivered our budgeted production in the second quarter. The mill has been performing well, and the site remains on track to meet its full-year guidance. At La Coipa, despite encountering some excess groundwater in the pits, production was higher quarter over quarter, and the site remains on track to meet its full-year production guidance. Our U.S. assets delivered strong production and costs as planned.

[Paul Rollinson, CEO at Kinross Gold Corporation]

In Alaska, we saw another quarter of contributions from both Fort Knox and Manh Choh that were on plan. In Nevada, we saw stronger production from both Bald Mountain and Round Mountain. At Bald Mountain, mining activity for phase one of Redbird is progressing well, and study work for phase two is ongoing. At Round Mountain, initial production from the phase S open pit has commenced and is expected to ramp up throughout the year and into next. At phase X, underground development is progressing well, and we continue to see strong exploration results. All of our projects continue to progress well in Q2. Our brownfield projects at Curlew and phase X both had positive exploration updates and are showing potential to contribute to our production profile later in the decade and beyond.

[Paul Rollinson, CEO at Kinross Gold Corporation]

The greenfields projects at Great Bear and Lobo also progressed well and are expected to contribute to our production in 2029 and 2031, respectively. In the current gold price environment, we are seeing value-generating investment opportunities across our portfolio that capitalize on our significant resource base and our recent positive drill results. We see opportunities to extend mine life while maintaining our focus on margins and shareholder value. The team will comment on our resource optionality later. Turning now to a few remarks on sustainability. Our annual sustainability report was published earlier in May. It is a comprehensive document, which I encourage you all to review. In Q2, we made progress across various water management initiatives, which remains a key focus area within our approach to sustainability.

[Paul Rollinson, CEO at Kinross Gold Corporation]

For example, at La Coipa, we enhanced water efficiency through an optimization program to reduce the amount of water loss going to our dry stack tailings. In Alaska, at Fish Creek, a historic mining area that Kinross Gold did not operate but later reclaimed for the benefit of the environment and local communities, fish populations continue to thrive. Turning now to our outlook. Following a strong second quarter and first half, we have produced just over 1 million ounces at a cost of sales in line with our guidance. Looking ahead, we remain firmly on track to achieve our full-year guidance. We will continue to maintain our financial discipline and prioritize margins to drive strong cash flow, which will support ongoing return of capital and further strengthen the balance sheet. With that, I will now turn the call over to Andrea.

[Andrea Freeborough, EVP and CFO at Kinross Gold Corporation]

Thanks, Paul. This morning, I will review our financial highlights from the quarter, provide an update on our balance sheet and return of capital program, and comment on our guidance and outlook. As Paul noted, we had a strong second quarter. We produced 513,000 gold equivalent ounces with sales of 508,000 ounces. Cost of sales was $1,074 per ounce, and with an average realized gold price of $3,285 per ounce, we delivered record margins of just over $2,200 per ounce. Cost of sales of $1,074 per ounce increased from Q1, largely due to higher royalties. Higher sustaining capital expenditures also contributed to higher all-in sustaining costs compared to Q1. In Q2, our adjusted earnings were $0.44 per share and adjusted operating cash flow was $844 million. Attributable CapEx was $302 million, split relatively evenly between sustaining and growth.

[Andrea Freeborough, EVP and CFO at Kinross Gold Corporation]

Attributable free cash flow was a record $647 million, or $542 million excluding changes in working capital. Turning to our balance sheet, which remains in excellent shape and continued to strengthen in Q2, we ended the quarter with just over $1.1 billion in cash and approximately $2.8 billion of total liquidity, both increasing from Q1. We improved our net debt position to approximately $100 million at the end of Q2 and expect to be at net cash in Q3. In Q2, we repurchased and canceled approximately $170 million in shares and subsequently have completed another $55 million, for a total of $225 million to date. Including our quarterly dividend, we have returned almost $300 million to shareholders so far and we're on track for our minimum target of $650 million this year.

[Andrea Freeborough, EVP and CFO at Kinross Gold Corporation]

As we look forward, we expect to continue to return a substantial amount of capital to shareholders while also strengthening our balance sheet with a view to repaying our $500 million 2027 note. Turning to our guidance, following the first half, we remain solidly on track to produce 2 million ounces at a cost of sales of $1,120 per ounce and all-in sustaining cost of $1,500 per ounce. Production over the two remaining quarters this year is expected to be relatively even at approximately 500,000 ounces each to deliver our full-year production guidance. Operating costs are budgeted to increase in the second half to meet our full-year cost guidance. The expected increase is due to the following reasons. First, planned mine sequencing with costs expected to increase at several sites as we transition from capitalized stripping into operating waste.

[Andrea Freeborough, EVP and CFO at Kinross Gold Corporation]

Second, some expected inflation as we progress through the rest of the year. Third, slightly stronger production in the first half, providing a favorable denominator on fixed costs, with production in the remaining quarter expected to deliver our guidance of 2 million ounces. Total capital expenditures remain on track to meet guidance of $1.15 billion, with a slightly higher weighting towards sustaining versus growth capital for the second half of the year. I'll now turn the call over to Claude to discuss our operations.

[Claude Schimper, EVP and COO at Kinross Gold Corporation]

Thank you, Andrea. In the second quarter, our safety programs continue to be focused on proactive identification of hazards, people development, and leadership training. We have continued to roll out our new safety brand, SafeGround, which has included co-design of site-specific and culturally relevant communication plans of key messages. Our operations continued their strong performance in the second quarter, delivering production of 513,000 ounces with strong contributions across the portfolio. Starting with Paracatu, the mine had another steady quarter, with strong production driving significant cash flow. Production of 149,000 ounces increased over the prior quarter due to the higher throughput and strong mill recoveries. Our cost of sales of $958 per ounce was in line with the previous quarter. Paracatu remains on track to meet its guidance, producing 585,000 ounces at a cost of sales of $1,025 per ounce.

[Claude Schimper, EVP and COO at Kinross Gold Corporation]

At Tasiast, we delivered budgeted production in the second quarter, producing 119,000 ounces at a cost of sales of $843 per ounce. Budgeted production was achieved through strong mill performance and recoveries. Restripping of the Fennec satellite pit to the north has also commenced in the second quarter. Tasiast remains on track to meet its production guidance of 500,000 ounces at a target cost of sales of $860 per ounce for the year. At La Coipa, we produced 54,000 ounces at a cost of sales of $1,397 per ounce in the second quarter. Ore tons mined were lower over the prior quarter due to higher-than-anticipated groundwater inflows into the pits, resulting in higher tons processed from lower-grade stockpiles and leading to higher costs in the second quarter. The team has gained a good understanding of the input water conditions and increased dewatering and made adjustments to the mine plan.

[Claude Schimper, EVP and COO at Kinross Gold Corporation]

Production is expected to be stronger and costs lower in the second half of the year as mining transitions to the planned higher grades from phase seven ore. La Coipa remains on track to meet its full-year production guidance of 230,000 ounces. Moving to our U.S. operations, production was higher quarter over quarter, benefiting from strong contributions from Fort Knox and Manh Choh in Alaska and stronger grades in Nevada. Collectively, the U.S. sites delivered production of 190,000 ounces at a cost of sales of $1,229 per ounce in the second quarter. Our U.S. operations remain on track to meet its guidance of 685,000 ounces at a cost of sales of $1,420 per ounce. At Fort Knox, second quarter production of 98,000 ounces was in line with our first quarter. Cost of sales of $1,247 per ounce was slightly higher over the prior quarter due to higher processing costs.

[Claude Schimper, EVP and COO at Kinross Gold Corporation]

At Bald Mountain, we produced 54,000 ounces at a cost of sales of $1,095 per ounce, improving over the prior quarter due to stronger grades as we were finishing mining at a higher grade LDM site. Cost of sales of $1,095 per ounce was lower quarter-over-quarter due to the higher ounces sold and a higher proportion of capitalized costs as mining at Redbird phase one continues to ramp up. At Round Mountain, production of 39,000 ounces increased over the prior quarter due to higher grades. Cost of sales of $1,376 per ounce decreased from the prior quarter. With that, I will now pass the call over to William to discuss our project.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

Thanks, Claude. We continue to leverage our strong in-house technical team to advance optionality across our large resource base consisting of 26 million ounces of measured and indicated and an additional 13 million ounces of inferred resource calculated at $2,000 per ounce. Our technical team is focused on drilling, technical studies, and permitting to advance resources into our production profile, while also conducting exploration aimed at identifying new opportunities to augment our resource base. Here, you can see updates on a few areas of our resource base. Starting in Chile at La Coipa, study and permitting work is progressing well for the oxide extensions. In Q2, we submitted our impact assessment, initiating the agency review process for permits to continue mining the next layback at [Pier N], which sits in our resource.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

We are already mining an open pit at [Pier N] today, and pending permits, we plan to extend mining through the end of the decade with this next layback of the pit. At Lobo-Marte, the project team continues to advance technical work as well as baseline studies to support our EIA. Project update will be provided with our year-end results. At Bald Mountain, technical studies, optimization work, and detailed engineering for the Redbird phase two extensions are ongoing. We call phase two would bring in an additional 680,000 ounces to the mine plan beyond phase one and extend production out to at least 2031.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

In addition, we are also progressing drilling, technical work, and studies across multiple smaller quick payback satellite pit opportunities at Bald that sit in our resource and could augment the Redbird phase two production profile. The prolific land package at Bald with over 40 historic open pits on the property continues to provide strong targets for mine life extensions and is a focus for our exploration and technical teams. Moving to Curlew, drilling in Q2 continued to highlight strong grades and widths, further improving the quality of the project and showing potential for high-margin underground production. This drilling included intersections of approximately 6 meters true width at 14 grams per ton at Stealth and approximately 5 meters true width at 12 grams per ton at K5. We've seen impressive growth of the resource size, quality, and grade over the last few years at Curlew.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

With these exploration results, we continue to see potential for further high-value extensions. The underground development has advanced over 800 meters as we extend our decline at depth towards our 2023 discovery at Road Runner and along strike at Stealth to target further extensions of high-grade mineralization. Technical studies and detailed engineering are also progressing well. A resource and project update for Curlew will be provided with our 2025 year-end results. At phase X, development of the underground exploration decline continues to advance with over 4,500 meters developed to date. Infill drilling is also progressing well with good coverage now extending across both the upper and lower target zones. The results are again showing good grades and widths in both areas, further increasing confidence in our initial exploration thesis of a bulk mining target at phase X.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

You can also see on the slide holes DX162 and 163, which were extension holes drilled down dip of our primary exploration target. With widths in excess of 60 meters and grades of around 3 grams per ton, the results of these extension holes show continuation of mineralization outside of the original target area. Beyond the exciting exploration results, engineering work and technical studies to support project execution of a potential underground mine in the main target area are also advancing well, including development of the underground mine design and schedule, extensive geotechnical studies, and studies for a paste backfill facility. The completion of the ongoing drill program and technical work will support a planned initial underground resource estimate and a project update for phase X as part of our year-end results update. At Great Bear, work on the AEX program and main project is progressing well.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

We've made significant progress on construction with the AEX camp nearing completion and earthwork activities in the portal area well advanced. You can also see on the slide that the drop cut for the portal area has advanced well with a high wall for the underground exploration decline now exposed with ground support already in place. We are excited by the progress to date and remain on track to start the initial development of the exploration decline by year-end subject to permitting. For the main project, detailed engineering for all site infrastructure is continuing to advance, including key items such as the mill and tailings facility. Initial procurement activities for major process equipment have begun, with awards planned to start later this year, and manufacturing of a few long lead items expected to begin next year.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

I will now hand it over to Geoff to provide a brief update on Great Bear permitting.

[Geoff Gold, President at Kinross Gold Corporation]

Thanks, Will. Permitting of the AEX program and main project continue to advance as we work with the provincial and federal authorities. For AEX, we have the permits we need for our current activities and expect to receive our two remaining water permits in the near term. In terms of the main project, we continue to work with the Impact Assessment Agency of Canada to advance the project impact statement. In order to advance the statement on a timely basis, we are coordinating with this federal agency on a staged filing process. We intend to file the majority of the technical chapters by year-end and the remaining chapters by the end of Q1 2026. This approach will underpin a robust impact statement filing with the necessary technical and Indigenous contributions and help facilitate an efficient review process.

[Geoff Gold, President at Kinross Gold Corporation]

We also continue to advance our IBA negotiations with Lac Seul and Wabauskang, on whose traditional territory the project resides. Lac Seul and Wabauskang are progressing their independent project impact assessment work, which will help facilitate federal and provincial permitting on the main project and the completion of the IBA. I will now turn it back to Paul for closing remarks.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Thanks, Geoff. After another strong quarter and a great first half of the year, we are well positioned to meet our targets in 2025. Looking forward, we are excited about our future. We have a strong production profile, are generating significant free cash flow, and have an excellent balance sheet. We have an attractive return of capital through both the dividend and share buybacks. We have an exciting organic pipeline. We are very proud of our commitment to responsible mining that continues to make us a leader in sustainability. With that, operator, I'd like to open up the line for questions.

[Operator]

Thank you. At this time, I would like to remind everyone to ask a question, press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from Fahad Tariq with Jefferies. Please go ahead.

[Fahad Tariq, SVP of Equity Research at Jefferies]

Hi, can you hear me?

[Paul Rollinson, CEO at Kinross Gold Corporation]

Yep, we can hear you.

[Fahad Tariq, SVP of Equity Research at Jefferies]

Okay, great. Thank you. I just wanted to ask about Bald Mountain. The grades were, of course, very high in the second quarter due to the LBM pit. Maybe just remind us how to think about the second half at Bald Mountain.

[Claude Schimper, EVP and COO at Kinross Gold Corporation]

Yeah Fahad, it's Claude. Morning. We've had a very strong first half of the year in Bald. The second half will be slightly off the pace as we continue to push on Redbird startup, which is progressing very well. From a production point of view, we expect it to be slightly less in the first quarter because we don't have the same LBM grades as we've now finished that area.

[Fahad Tariq, SVP of Equity Research at Jefferies]

Okay. Maybe just taking a step back, the U.S. operations as a whole, it seems like it could be trending above the midpoint of full year guidance. Maybe just walk us through, are there any offsets that we should be thinking about? It sounds like Bald Mountain and Round will be pretty strong in the second half as well.

[Claude Schimper, EVP and COO at Kinross Gold Corporation]

Yeah, we expect to continue the good performance from the U.S. operations. Obviously, our second half will be slightly lower at Fort Knox as we cycle out the different production from Manh Choh and Fort Knox. I think, as we've said across the board, we've had a very strong first half of the year from all the sites and good contributions. We do expect the second half in the U.S. to be slightly lower. As Andrea said, that's impacting the cost as well.

[Fahad Tariq, SVP of Equity Research at Jefferies]

Okay, thank you.

[Operator]

Again, to ask a question, press star one. Your next question comes from the line of Carey MacRury with Canaccord Genuity. Please go ahead.

[Carey MacRury, Equity Research Analyst at Canaccord Genuity]

Hi, good morning, everyone, and congrats on the good quarter. Maybe first on the tiering for Laid Back, just wondering if you can give us a bit more color on what that looks like from a tons of ore perspective and grade and maybe strip ratio if you can.

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

Yeah, we can give you a sense of it. We're looking at, we've got about a little over half a million ounces of resource there. I think the average grade there is similar to what we've seen in the past, around that 2 gram per ton mark, potentially a little bit lower as we continue to optimize the pit there. We see the potential to continue with similar mining at [Par and Four] to what we've seen in [Paracatu].

[Carey MacRury, Equity Research Analyst at Canaccord Genuity]

have any high-level thoughts on strip ratio?

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

We might have to get back to you on that. I'm not sure off the top of my head the exact strip ratio of the extensions. I think it's relatively similar to what we've been doing. You can see in the image that we've stripped the majority of the deposit already.

[Carey MacRury, Equity Research Analyst at Canaccord Genuity]

Okay, fair enough. Maybe for Andrea. Your focus on paying down the $500 million debt due, I think, in 2026 or 2027. Beyond that, is there any plans to buy back any debt earlier, or are you comfortable to hold that debt? It is pretty long-term and pretty attractive rates.

[Andrea Freeborough, EVP and CFO at Kinross Gold Corporation]

Yeah, I mean, there's obviously a cost, always a cost associated with retiring debt early. First up is the 2027, as you said. We expect to repay those either at or potentially before maturity. Taking a step back, we're just expecting to get to net cash in the third quarter. We've talked previously about sort of a minimum cash balance around $500 million. We're now at the end of Q2 at $1 billion, which is the minimum cash of $500 million+$500 million that we could use to repay the 2027. That's sort of where we sit today, but we're certainly comfortable continuing to grow the cash balance.

[David Shaver, SVP of Investor Relations and Communications at Kinross Gold Corporation]

That's it for me. Thanks.

[Operator]

Our final question comes from the line of [Tanya Jacusconek] with Scotiabank. Please go ahead.

[Operator]

Oh, great. Good morning. Thank you for taking my questions. Congrats on a good quarter. The first one is just, Andrea, if I can continue your line of thought on your free cash flow. We're going to be net cash positive in Q3. You've got that $1 billion in cash on the balance sheet. You're going to pay down the $500 million notes in 2027. Should I be thinking then, if I keep the cash in that $500 million range, anything above and beyond would go to your share buyback?

[Paul Rollinson, CEO at Kinross Gold Corporation]

Yeah, maybe I'll jump in on that one, Tanya. Thanks for the question. I guess I would just say, number one, what's important here is we're going to do what we say we will. We did commit to $500 million in buybacks. For context, we're all very happy with where the gold price is. We just reactivated the buyback in Q2, and now we're reporting Q2, and so far, so good. We're definitely committed to the 500 and the 150, so 650 of returning capital. As we look through the windshield later into the year, it's all kind of gold price dependent. We've always said we also want to continue to build cash on the balance sheet. I guess it feels early days to sort of make a prediction on what we might do with excess cash at this point. It's kind of hypothetical.

[Paul Rollinson, CEO at Kinross Gold Corporation]

I think what's important is it's clear that we have been buying and we'll continue to buy. If all of this positive gold price continues, our expectation is we'll keep going with the buyback next year and perhaps the year after, depending upon share price and gold price.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Thank you for that. If I could ask a second question, I'm trying to understand how you're getting through your budgeting phase as you look forward to 2026. How are you thinking about your life of mine plans and your reserve and resource base? It's quite different from lower gold price assumptions versus where the gold price is today. I'm trying to understand how you're approaching your life of mine plans and your reserves and resources given the discrepancy in pricing.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Yeah, maybe I'll take that one as well. I mean, it's interesting times. I'm looking at spot and I'm looking at, for example, long-term consensus. Commodity prices that you guys are using, and there's never been this big a lag. I think we're all kind of absorbing, digesting, where's this gold price going? Where's it going to last? I think if the gold prices hang in around current levels or higher, you'll probably expect the industry will move up their reserve resource pricing again. Those are decisions that happen towards the end of the year. Key point for us, though, is we don't need those higher prices. We've said many times we're not in a high-price environment dropping our cut-off grades. We're absolutely focused on margin, cash flow, value creation. You're right.

[Paul Rollinson, CEO at Kinross Gold Corporation]

As Will alluded to, we have a lot of optionality in our portfolio, and we're getting really good results in exploration. We're advancing more studies. I think the way I would think about those studies and the optionality is really about more production in the 2030s. As it relates to the gold price, as you can expect, we're going to look at a range of prices, just like we look at payback, bang for buck, IRR. It's a good place to be. We've got a significant amount of optionality. The gold price, certainly, and combined with the exploration results, gives us lots to think about. Right now, we're not using any higher gold prices than what we've got currently in our reserve resource.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Yeah, I appreciate that. It's an interesting time for the industry. Never had this discrepancy before. Hollywood problem, I guess. Maybe my final question, if I could. Despite the gold price, can we just talk about some of your properties where you are seeing these exploration results that you're going to be able to replace reserves regardless of the gold price? What properties do you?

[Paul Rollinson, CEO at Kinross Gold Corporation]

I think the key, yeah, I mean, the key areas where I think we're really excited is at Curlew, which Will alluded to in phase X, where these are brownfield development. I think we're kind of guiding softly that these could be contributors in around 2028. Two things are happening there: they're growing in size, and we're getting good grades and widths, so they're moving in the right direction. I would highlight those two in particular.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Okay, thank you very much for taking my question.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Thanks, Tanya.

[Operator]

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

[Anita Soni, Managing Director at CBIC World Markets]

Hi. Good morning, guys. Thanks for taking my question. Most of them have been asked and answered already in terms of capital allocation, gold prices, and the reserve replacement. Could you just give a little color on Lobo-Marte and how you see that fitting into the fold and the work you're doing there?

[William Dunford, SVP of Technical Services at Kinross Gold Corporation]

Sure. Yeah. As you know, we released a FS on Lobo-Marte a few years ago. We're really in the permitting process right now. We're making sure we're doing the robust technical work to support that permit submission. We see that as a really strong all-in sustaining cost, high-margin mine, really just on the back of the grade. It's 1.3 grams per ton going on to a heap leach. It's a really strong economics. Low strip ratio, yeah, two-to-one strip. It's going to be a really good contributor in the 2030s. We're just going through the process of getting ready for the permitting efforts right now. It's kind of on that escalator to get it into the production profile, doing all the right upfront work.

[Anita Soni, Managing Director at CBIC World Markets]

All right. Thanks for taking my question. Congrats on a great quarter.

[Operator]

Your next question comes from the line of Carey MacRury with Canaccord Genuity.

[Carey MacRury, Equity Research Analyst at Canaccord Genuity]

Hi, I just wanted to follow up on the higher cost expected in the second half. Andrea, you mentioned that that's going to occur at a number of operations. Just wondering if you can highlight which of those operations we should be looking at.

[Andrea Freeborough, EVP and CFO at Kinross Gold Corporation]

Sure. I mentioned previously, I think even back last quarter, there's a couple of operations where we're moving from stripping being characterized as capital to operating waste. That's Fort Knox, phase 10, Round Mountain, phase S. At Tasiast, we also have more operating waste in the second half and planned lower grades. Those are the three operations where we're seeing the change in stripping cost characterization. There are some other impacts as well. At Paracatu, we expect higher power costs in the second half. That's just typical seasonality, and also potentially higher power costs in Alaska. All of that is reflected in our guidance. We're still on guidance for our annual guidance for the year. This is just explaining why the second half is higher than the first half to get us to those guidance numbers.

[Carey MacRury, Equity Research Analyst at Canaccord Genuity]

Okay, great. That's helpful. Thanks, Andrea.

[Operator]

With no further questions in the queue, I will turn the call back over to Paul Rollinson for closing remarks.

[Paul Rollinson, CEO at Kinross Gold Corporation]

Thank you, operator. Thanks, everyone, for joining us this morning. We look forward to catching up with you in person in the coming weeks. Thank you.

[Operator]

Thank you again for joining us today. This does conclude today's presentation. You may now disconnect.

Participants

Executives

• Paul Rollinson, CEO
• Geoff Gold, President
• William Dunford, SVP of Technical Services
• Andrea Freeborough, EVP and CFO
• David Shaver, SVP of Investor Relations and Communications
• Claude Schimper, EVP and COO

Analysts

• Fahad Tariq, SVP of Equity Research at Jefferies
• Analyst at Scotiabank
• Anita Soni, Managing Director at CBIC World Markets
• Carey MacRury, Equity Research Analyst at Canaccord Genuity