Q3 2022 Kinross Gold Corp Earnings Call

Good morning, My name is Rob and I'll be your conference operator today.

At this time I would like to welcome everyone to the Kinross Gold third quarter 2022 results conference call and webcast.

All lines have been placed on mute to prevent any background noise. After the speakers' 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 again press the star one.

Thank you, Chris Lipton Hill, Vice President Investor Relations you May begin your conference.

Thank you and good morning with US today, we have Paul Rollinson, President and CEO confirmed the Kinross senior leadership team Andrea free row bought chamber <unk> and Geoff gold.

For a complete discussion of the risks and uncertainties, which may lead to actual results different from estimates contained in our forward looking information. Please refer to page two of this presentation. Our news release dated November nine 2022 P. M. D&A for the period ended September 32022, and our most recently filed Aif all of which are available on our web.

Right.

I will now turn the call over to Paul.

Thanks, Chris and thank you all for joining us.

Today I'm going to update you.

On our third quarter performance.

Our expectation is going forward and great there.

First I would like to introduce our operational leaders.

Claude Shrimper as our new Chief operating officer.

For those of you who don't know Claude he has been with Kinross for 12 years and.

Prior to taking on the CFO role he's very successfully led our Russian business.

And then took on added oversight of our African operations.

<unk> is our new senior Vice President of technical services.

Ned first joined Kinross 10 years ago, and has added significant value in several areas, including previously, leaving our successful optimization of parakeets here in Brazil.

Well, it's quite a net our mining engineers with deep technical experience globally, and our boots on the ground management style.

As you will hear shortly our new operational leadership is off to an excellent start as we see significant improvements in key metrics across our portfolio.

Okay.

With respect to our third quarter performance, our operations continued to make strong progress with production up 17% and costs down 8% compared to the second quarter.

Similar to prior years, our plans again this year called for increasing production throughout the year, which we are seeing.

Last quarter I discussed the production increase we expect in the second half of this year.

The four key areas, where it is expected to come from.

Specifically parakeet chair the U S shapes.

Coipa and Tasiast.

At Cherokee to ask for our mine plan grades have increased from the second quarter to the third quarter.

And the operation continued to deliver on plan in October .

Setting the stage for an exceptionally strong Q4.

Second.

The seasonality effect from our U S keeps is playing out as expected.

And production increased nearly 20% in the third quarter.

Third.

We have worked through the challenges that la coipa, where the operation is expected to continually improve.

However, given the time required to resolve the issues. We now expect full year production to be approximately 100000 ounces.

At Tasiast mill throughput and recovery were lower than planned due to some commissioning challenges in processing high grade ore.

As Claude will describe later.

We have made good progress in resolving the challenges.

And we expect the fourth quarter to be significantly stronger than the first three quarters.

However, given these challenges we now expect cash yet to come in around 550000 ounces for the full year.

And then back up to design levels going forward.

Given the slower ramp ups at La Coipa and Paas, Yes, we now expect consolidated production of approximately 2 million ounces for 2022.

Going forward during the 2023 through 2025 timeframe, we expect combined production of more than 6 million ounces with relatively stable production each year.

Our renewed focus on capital discipline.

Cash flow generation resiliency.

I'd now like to comment broadly on how our business is positioned in the current economic environment.

Given that the gold price was down compared with the first half of the year.

Cumulative inflation in the past 18 months is approximately 20% we are adapting our plans.

As always we remain disciplined in our business planning.

We are prioritizing reinvesting in our business, where we can generate the highest returns in our mine plans are focused on generating attractive margins in order to ensure we are positioned for strength in this environment.

Our new technical and operational leaders have completed an extensive review of major investments and pit phases across our portfolio.

The good news is we have optionality in our portfolio and a number of areas.

Including where we are looking at the transition from open pit to underground mining as part of this process. We have also completed the optimization study at round mountain.

And have decided to defer open pit.

Expansion is for phase F and W. Three.

Focus on more attractive underground targets that have shown very positive results.

Of course, the ounces from the open pit phases are still in the ground.

And we maintain the Optionality to mine these pages, if the environment improves.

Ed will provide more detail on these plans later on the call.

Yeah.

Finally, this extensive review of our operations has also served to confirm.

The robust economics of our other plants across the portfolio.

Finally, I'd like to comment on great bear and how excited I am about the results we're seeing.

Our drilling continues to confirm our thesis of a large high grade deposit with mineralization coming to surface and remaining open in all directions. In particular, our drilling continues to confirm our thesis that the deposit extends to depth.

In fact as you can see on the slide.

Our current drilling program recently intercepted 16 grams per tonne over 24 meters at.

At a depth of approximately 700 meters at the you must shoot well we are still early in our steady process. We are very pleased with what we're seeing and expect to release. Our initial resource early next year alongside a technical report focused on geology and metallurgy.

We are targeting an initial resource of four to 5 million ounces, but ultimately expect this deposit could support a multi decade mine, which produces many times this amount robust margins.

We are excited to have an asset in Canada and Red Lake is an excellent mining jurisdiction.

Our timeline is consistent with projected timelines for other projects going through the same process.

Having said that we have an excellent team that will take every opportunity to expedite the process.

With the goal of achieving first production as soon as possible.

With that I will now turn the call over to Andrea.

Thanks, Paul This morning, I'll discuss financial highlights from the corner provide an overview of our.

Our balance sheet and capital allocation.

I'll comment on our guidance and outlook.

As Paul noted our third quarter production was 529000 ounces.

17% over Q2, continuing to show improvement quarter over quarter across our operations.

Our Q3 cost of sales were $941 per ounce, which is down from the previous quarter with a further reduction expected in Q4 as production continues to increase.

All in sustaining cost $282 per ounce in the third quarter, a decrease from the second quarter driven primarily by the increase in production as we indicated in our news release yesterday, we expect our cost of sales to come in slightly above $900 per ads for the full year and our all in sustaining costs to the approximate.

<unk> hundred 40 <unk> craft.

Our third quarter, adjusted operating cash flow with $239 million up slightly from the second quarter of higher production and lower costs offset lower Cogs.

Free cash flow in the quarter was negative as a result of a working capital outflow some of which related to timing of Bal.

Excluding Clarkson capital.

We generated over $60 million of free cash flow.

With substantially higher production in the fourth quarter, we expect significant free cash flow.

Capex of $197 million Q3 was higher than Q2, but still below our comps for the year due to lower capitalized stripping in Nevada and that looks like.

We now expect to spend closer to $750 million.

Yeah, Thanks, primarily on the lower capital spending as well as the decision to confirm phase W. Three in phase I open pit expansion at round mountain.

Turning to the balance sheet, our financial position is strong and we expect it to remain strong despite the challenging macro environment. We ended the quarter with $488 million of cash and approximately $2 billion in total liquidity.

Our trailing 12 months EBITDA ratio was relatively stable during the quarter at one eight times.

At current gold prices, we expect net debt to EBITDA to be similar at year end before declining by the end of next year.

Our next debt maturity is in 2024, when we have $500 million of senior notes coming due and the current gold price environment, we expect to be lucky to refinance these notes sometime during 2012.

Turning now to our capital return program. Our total return of capital. This year is expected to be approximately $450 million or more than 8% of our current market cap in the form of both buybacks and dividends.

We repurchased $60 million of shares during Q3 at $180 million to date this year.

We've now repurchased the shares issued in our acquisition of Greenbrier.

I will now turn the call over to Claude.

Thank you Andrea.

This morning, I'll provide some additional detail regarding our ramp ups at liquid plant is just but first I'd like to provide a little more context on what I've been focused on since taking on the role of Chief operating officer.

I've been in the role for about three months and have been spending considerable time at the sites closer to your viewing our practices and our plans related to the operational performance as well as safety.

Working with the operational teams, we have found opportunities to enhance our discipline around operational excellence.

And delivering on our plans.

We're also driving a renewed focus on generating robust margins and strong returns on our capital.

I have examined our operating plans and have made some changes to ensure we achieve our objectives.

As Paul mentioned, we have adjusted our production expectation to reflect these changes and to be more realistic in the risks we face.

Moving to our operations third quarter production was significantly stronger than the second quarter.

Tasiast and La coipa, while behind initial expectations made progress and I'll say to have a very strong fourth quarter.

At Tasiast mill throughput and recovery were lower than expected due to temporary commissioning challenges with the new leach tanks and the gravity circuit.

Which resulted in lower than planned mill availability and retention time in the leaching circuit.

We have now commissioned three new Leach tanks, which has increased retention time and allowed us to add a pre oxidation stage.

These adjustments have helped drive recoveries back to 90% and the team continues to focus on an extensive action plan to improve mill availability and ensure high recoveries with sustained throughput.

We now expect to produce around 550000 ounces at Tasiast this year.

While the ramp up has taken longer than originally planned we are encouraged to see steadily increasing throughput and production through Q3.

As we have results commissioning issues and improve the reliability of the moment.

In October we produced 20000 ounces and averaged 9500 tonnes a day hitting up does on capacity of 13000 tonnes a day on multiple days.

We have also seen our highest grade since restarting liquid in October with an average mill grade of one five grams, a tonne as demand hits, its stride and gets into the higher grade ore.

The Cooper is well positioned going forward.

One is in excellent shape, the mechanic shop and other infrastructure are all in order and the tailings facility is operating at designed levels.

The adjustments to the plant are now behind us.

I'll now hand over to Nick.

Thank you Claude and good morning all.

Also been into a new extended dwell for approximately three months.

My focus is on leading our project and technical services teams.

<unk>, our strategic mine planning process.

Spent considerable time reviewing great Byrd, our round mountain optimization plan and our other projects.

I'm excited about our growth projects and the future of the company.

Turning to round mountain.

We have completed our optimization work, which looked at four primary opportunities to exploit the significant resources.

W. Three phase as phase <unk> underground and gold Hill underground.

That work has highlighted the potential for higher margin underground operations at <unk> X and gold Hill.

Which are better suited for the current gold price and inflationary environment.

We will focus on continuing mining phase W. One and W. Two open pit pushback, while we progress underground infrastructure development and exploration at Phase <unk> singled Hill.

We are excited about our recent results on phase exiting gold Hill underground and see opportunity to build a more resilient lower <unk> operation at round mountain through parallel mining eventually also both phase <unk> and gold Hill.

With phase <unk> drift starting early next year.

Based on the drilling to date, the two mines could work well together in that Phase X has the words and the potential to be a bulk mining underground operation at opera.

<unk> grade of approximately three to four grams per tonne.

Gold Hill shows potential to be a narrower higher grade operation at six to eight grams per tonne.

We see potential for the combined underground operation to produce approximately 150000 ounces per year at an average ASIC of 1000 to 1100 per ounce.

That same optimization work helps ensure capital discipline and led to a decision to deferred fees <expletive> and phase W. Three open pit expansion phase.

<unk> S and W. Three remain economic in the current gold prices and could be exploited in the future when the gold price our cost drive improve moving to great bear.

Even more excited today than we were at the time of the acquisition.

The more work we do on great bear the more confident we are in our thesis that this orogenic deposit is analogous to hemlo, which produced more than 20 million ounces.

We now have substantial drilling down to 500 meters and are very excited about continuing to explore depth expansions over the coming months.

In addition to the hold that Paul highlighted you can see from the slide we have numerous holes with strong widths in grades. For example, we have intercepted 29 meters at seven grams per tonne at the hour issued and 25 meters at 12 grams per tonne and the iron ore shoot.

And importantly, the deposit remains open in every direction.

Looking ahead, we have exceptional upside potential on our highly prospective land package.

Mainly we are focused on exploring for possible zones parallel to the LP fault zone as well as further additional zones for more traditional Red Lake style mineralization similar to our hinge and lenses.

We are on track to release, our initial results were great Bear early next year and continue to expect four to 5 million ounces, which is a significant accomplishment having owned the project since February of this year.

As we approach. This initial resource it's important to remember that we remain in the early stages of drilling the deposit and therefore can only demonstrate a small portion of what we believe will ultimately be proven.

Over the next couple of years.

We'll continue on our exploration infill drilling and drilling at depth by mid 2024, we expect to begin our exploration decline, which will allow more efficient drilling at depth.

In terms of mine planning, it's still early and we continue to explore a range of sizes.

Sequence options and underground development timelines.

Our focus at this point is performing sufficient internal study work to start the clock on permitting early next year.

Having said that our current thinking is we will narrow on a mill size of 10000 tons per day, a high grade open pit in the range of three grams per tonne and an annual production in the range of 500000 ounces per year.

I will now turn the call back over to Paul Thanks, Scott I'll close by saying that in the third quarter, we have made significant progress in.

And positioning our business for strength going forward, we have our <unk> and tasiast ramp ups, mostly behind us.

Our renewed focus on operational excellence.

A dynamic capital return program.

And our strong and stable production outlook.

We are looking forward to a strong fourth quarter.

And are well positioned to move into next year.

Thank you operator, we can now open up the line for questions.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

And your first question comes from the line of Anita Soni from CIBC World markets. Your line is open.

Hi, good morning, Thanks for taking my questions. So firstly on the capital the deferrals that you mentioned in this year or so.

About 100 million is that.

We look to next year would you expect some of those.

Capital reductions to come in through sorry.

Of that capital to be deferred into next year or are we still looking at like $750 million of capital for 2023 and 2024.

Hi, Anita its Andrew I can take that.

I guess to start the 100 million that came off of 2022.

Mostly griffin.

Some of that was related to phase asked MW three at round, so that doesn't come back next year.

About half of that.

Half of the decrease of about $50 million.

And then I guess.

Sure haven't provided that guidance yet earlier this year, when we talked about $750 million.

For 2023.

We noted that that was before adding additional inflation than before.

Any additional CRO Jack so.

Since then we've approved manned shallow and that should be in the neighborhood of $150 million.

For our portion in 2023.

So yes.

We're expecting all things considered I think you guys had a inflation some of that stripping the part not related to route marathon coming back next year I would expect next year's Capex to be in the neighborhood of $1 billion.

Okay.

And then moving to costs, if I may because thats. The other one that you provided the production guidance and thank you for that but the cost outlook.

So.

I can't remember if you had provided any kind of an outlook or guidance I don't think you had but as we look to next year and you are sort of sitting at around 900.

$1 per ounce this year slight production increase now guided to year over year should we be thinking around.

Maybe a little bit better than $900 per ounce or is there other factors that play in like I know that we're quite pleased that youre getting more contribution from a quite bond that had pretty good.

Costs, there, but is there other offsets that does look quite a bit coming in.

Yes, maybe I'll start with handoff to Andrea.

Yes, Youre right I mean, we give our guidance in February we're in the middle of our budgeting process as we speak.

Normal cycle.

We're all still studying the inflation situation.

Some puts and takes there some softening, but we don't see it going away.

So that's why we haven't provided cost guidance at this point, but it will be coming but in general directionally.

Yes, Directionally I mean, we're not expecting.

An increase but we're also not expecting a significant decrease as Paul said, we're in our budgeting process. We haven't quite made a call on inflation, yes next year, but we can assume that Scott so.

For now I would just think about next year's cost is flat.

Our Costco will end up for the year this year.

Okay and then my last question.

Before I pass it off as we look at the guidance revision where.

Reduction for 2023, so going down to $2 1 million ounces could you you may have said that in their comments, but could you just go over the areas, where you saw the major kind of reductions there. So I would assume some of it was it targets a little quite but you also mentioned a review across the operation. So I just wanted to hop.

For a bit of a breakdown in that 200000 ounce reduction.

Yes, I'll start and maybe closing.

It is primarily.

Point number one it's not lost its deferred its just sliding it out.

Slide out is mostly coming.

La Coipa and Tasiast.

I think we said we've got the before we're on top of some of those commissioning.

Challenges, we encountered there behind us, but we'll continue to ramp here. So as we said good third quarter.

Set up for an excellent fourth quarter.

But as we go into 'twenty three.

Which moves we smoothed the guidance really out through 'twenty five.

And.

We've guided to one we don't get into sort of second decimal place guiding but.

There is some flex in the system there.

I think we will tighten up as we are.

As we get into our official guidance in mid February .

Okay, and then but just let me try to pick up the second decimal place than on.

On Tasiast.

As we look I think you indicated that.

Is that the throughput rates might be a little bit lower than what we had previously anticipated with the second half of the year 2014 ton per day, but you said that youll, probably not reach that sustainably until 2024.

What kind of grades are we looking at because I can't really get to that tasiast strict that much of a reduction number without impacting my grades for next year.

So I need a quota I'll take that one.

So two things one is Sydney in terms of the 24 K, it's not too it's not necessarily towards the end of the year, we expect to be there.

Getting the multi tenant that rate by midyear and then moving on through the year two bank it's sustainable.

Challenge with that.

The thing is that in order to get there you need to shut the plant down to do some tie ins and therefore those days that youre doing that affects your average for the year.

But overall.

We should be running at the 24000 tonnes a day towards the back half of the year consistently.

That's the intention.

The average grade for the year is two eight grams, a tonne and we expect to meet those we've had some really good reconciliation in other parts of this year and as Paul noted, we've set up for a very strong fourth quarter and moving into next year now.

Okay. Thank you I understood the concept and the sustainability I can see from the 21 U K you have reached those levels on instrument, but it's not sustained yet so obviously, assuming the same for to 'twenty four but thank you I'll leave it there.

Thanks.

And again, if you would like to ask a question. It is star one on your telephone keypad.

Next question comes from the line of Greg Barnes from TD Securities. Your line is open.

Yeah, Thanks, Paul or whoever can you give us a sense of how round mountain production is going to look like going forward with this switch the underground we.

We got $2 50 to 300000 ounces a year and I'm all right now is that what we're looking at for the short term and then going down to 150000 ounces a year, how how does this evolve.

Yeah, I'll, maybe take the lead and then handoff to Matt.

I think you're essentially right as we said the next two years really don't make any different we're going to continue mining.

As.

We're currently in those phases of the open pit.

And then as we and again this is context, we've taken 20 million ounces out of this pit.

Over the life.

No. It's the feeder mineralization is coming from the west.

It is higher grade as we go down and as we've.

<unk> gone through our.

Scrub with our new team here and really looked at it we think we've got.

Very attractive three Gram underground scenario that we can that we can profitably mine as we as we go to adapt.

There won't be a transition from the open pit to the underground and then Ned maybe just maybe you can elaborate.

We're thinking for production I think you covered it in your script.

Yeah. Thanks, Paul so.

Like it will like what you said.

The open pit is unchanged for the next two years, we're targeting approximately 250000 ounces for the next two years.

And then.

We still get the benefit although we're not mining opened into beyond a piece at this point of the deferrals, we do get the benefit of the benefits of the lean sales.

That puts us in a good spot as we plan to drive exploration drift next year from our phase as to start ramping phase X in 2026.

And then take that up to approximately 100000 ounces in production coming from feed ads and then layering on top of that Gold Hill.

Again targeting approximately 50000 ounces of production that gets you to 150000 ounces of production potentially 28, 29, and then what we see based on the drill inventory we've seen we see around 700000 ounces to 1 million ounces now.

That has the potential to grow through the exploration program at both gold Hill and Phase <unk>.

That will cover us through this decade and go into.

2033 and beyond.

Yes, so the way I look at it Greg is.

Yes, we got lower production, but where gold seeking cash flow as opposed to production.

So for lower capital.

We get higher grade higher margin.

Greater flexibility and potentially more.

Longer mine life.

Any sense on what capital we're looking at as you progress into the underground versus what you were looking at for the open pit scenarios.

Well, it's just.

As you know with the pit the size of around any lay back in the one hundreds of millions of dollars.

To keep getting deeper in the pit.

Versus underground, we haven't got those numbers completely firm that I want to share them today, but we are going to put in the decline in both gold Hill.

And round.

So access to get down there for those is in the neighborhood of $66 million.

And then more into it we will continue with the drilling is net says.

As noted has said.

With the decline, we should be able to extend the mineralization.

And then what I would do is I would reverse engineer kind of.

The kind of ounces I think if you were to double the 700 to say one five.

You can see.

Why we're going in this direction as opposed to continuing to push the size of the pit.

Okay. That's great that's very helpful. Thank you.

Just to add Paul So as you know, Greg phase as and doubling.

The ounces are still in the ground so in.

In the event on top of this path to underground.

Targeting now.

The macro environment changes those are available for us as open pits Bush Cogs in the future.

So the declines wont impact phase W. Three they won't.

Not at all to your ability to get.

The optionality.

And again, we're just kind of looking at our notes here I think if you've thought about the saves us on W.

Those are probably from.

From a lay back capital.

Okay.

<unk> 300, each three 350.

Versus transitioned to an underground is probably has a two in front of it.

Okay.

That's great. Thank you.

Yes.

Your next question comes from the line of annual scheduled panic from Scotiabank. Your line is open.

Good morning, everyone I think Thats me.

Okay.

I'm going to ask Tim asked me. So I've got a few questions. Just wanted to follow up just on that round mountain if I could just make sure I understood. It. So we're going to be in this 250000 ounce production range for 'twenty three 'twenty four.

And then it looks like we are going to decline to 150000 ounces into 2028 is that correct.

Yeah. So.

Good morning, <unk>, just tell yes, Tien tsin, Tania sorry, okay sorry.

And yet.

So yes, we're looking at the next two years like what you said 260000 ounces targeted then we do have a transition between the open pit and underground.

And we would benefit from the Leach tail for 2025 and 2026.

And approximately for 2025, we're looking at.

Production during the transition period, which included <unk> five between 60000 ounces and 800000 ounces of production ramping up in two.

<unk> 2026 two.

Approximately 100000 ounces and then.

Towards 2020 as you go up to.

Somewhere between $800000 and 160000 ounces and then sustained production at the 160.

B.

<unk> dot.

Yes.

So, yes, we're going to be mining, we expect three grams.

At round in depth.

Circa six grams gold Hill, we blend those.

Two two sources and.

Obviously, our goal seeking higher margin and higher cash flow.

Yes, no I understand that I was just trying to understand from an overall production profile for 250 to 50 23, 24, we kind of move down to that 50 or 100000 ounces.

Residual Alastair.

25, 26, and then we slowly move back up to that 150 with the underground.

Got it correct Bob.

Right is that correct, yes, alright.

And that's 60 million for the decline.

The $60 million for the decline over over this year, sorry in 2023 and 2024.

Alright got it thank you so much.

That information and.

And the only other thing I wanted to ask just within that production profile and again looking at some of the technical studies.

We are out there and some of them are at a little better.

Are we expecting just Paris appear to be very similar in 'twenty three to 2022 is just.

I Havent bumped 2023, and I, just wonder when I adjust that la Quinta on Tasiast should I think of <unk> as a flattish production in 2023.

Yes, Tanya it's Claude the simple answer is yes.

<unk> two has become really the stable workhorse of the portfolio and.

Production is very similar to this year alright.

Alright, so something in the 550 <unk> okay.

So that's very helpful. Thank you so much for that and then just wanted to circle back just two.

The balance sheet and then lastly, just on inflation just on the balance sheet. Andrea you mentioned net debt to EBITDA ending the end of the year very close to what we have now and then declining in 2023 I'm just wondering with the refinancing of those 500 million note should we just assume that there.

Refinanced out at just obviously higher interest rates because that's the environment that we're at is that how we should think about it.

Yes, I mean as I said, we're we've got a strong balance sheet and we.

We expect it to remain strong we are.

Given where oil prices are have been recently.

We do expect that we'll refinance those notes.

We have options, but if you looked at.

Setting the U S investment grade.

Yes.

Today, it would be somewhere in the high 6% range.

To add to fresh styles notes out.

We do have ample liquidity now so we've got options.

We've got our $1 5 billion revolver that <unk>.

Generally no.

Normally undrawn.

I was sort of a backstop, but that gives you an idea of what the what the U S public debt with Barclays, which is about a 1% spread on where we are today what are those charges.

Okay.

Well. Thank you and then Paul maybe just like I've been asking all companies.

<unk> Conference call is as we look out you know we have.

Some sort of relief.

Seeing some sort of relief and input costs within the cost structure and Andrea mentioned that obviously cost may not be going down next year.

I'm just trying to understand where are you seeing relief if any in your cost structure.

Just the diesel you know consumables, maybe youre seeing something in NAND I don't know if you're seeing anything in labor just trying to see if youre seeing any signs of easing.

Yes.

Your last question, but I guess my point, just the overriding point is.

We don't see the same inflation in all locations.

In fact, as we've said we actually.

I've probably seen.

More significant inflation in Nevada.

And then other parts there is inflation everywhere, but we felt it more in Nevada.

And we've seen it in people costs.

The energy cost the spare parts.

That's a place where we're really felt it the most and and as we said on our call we've done a rigorous.

Kind of a resiliency cash flow scrub.

<unk>.

The only asset where we've adapted our plan is round mountain and as a result of that.

Everything else still holds him very well, but maybe you could just elaborate a little bit on what I've seen a little bit of light maybe at the end of the tunnel, yes. Thanks, Paul So like what Paul mentioned, So for example diesel and grinding media, we actually have started that to taper off.

The peak and start coming down.

Unfortunately, cyanide and bulk explosives are still at their peak again were working.

Hard with our suppliers.

In order to.

No.

Come up with the best estimates for next year as we go through the budgeting process and finally.

Back to Nevada.

The <unk> mill.

Also saying has been impacted by the higher natural.

The mill and Leach both have been impacted by an increase in power cost and natural gas.

In addition to the consumables, we are seeing that still.

Still at the same levels as several months ago.

Okay.

In our Q2 call we had.

Paul mentioned that we were seeing inflation in the 10% to 12% range.

And your costs would you say that's similar in Q3.

Well I think what we said.

So the journey for us on inflation was going back to <unk>.

'twenty one.

We were starting to talk about 5%, we put our guidance out there.

At the beginning.

Over the year in February we said, 7%.

For the year, we said, we'd update at mid year and on the second quarter. We said, it's actually not seven what we guided but it's 12.

And that seems to be holding in at 12%.

As we continue through the year.

But its a cumulative 12 on top of a five last year and as I say not all sites are exactly equal and some we've got a little bit more pressure some a little bit last but 12 is the number I would use as a.

Kind of in a way.

Weighted average for 2002.

Noted and just if I could ask on labor.

You have seen increase in labor in the last 5% to 8% I think you said in the.

On your previous call with high turnover any relief in labor anywhere.

Yeah.

Hello.

Tony I again, I would say that the pressure is still on labor.

Have finalized contracts in Chile, and Brazil.

For three years on both sides.

The U S. There's a little bit more.

Flexible, but we are in order as you know our retention strategy.

Remains at round in Nevada.

In particular.

We have not seen the pressure come off label in.

In fact, it again in the U S. It's a bit more of a competitive market, especially in the lowest skilled positions.

Okay I'll leave it there. Thank you so much for that I'll leave it for someone else to ask questions. Thank you.

Thank you.

Your next question comes from the line of carrier Mccurry from Canaccord. Your line is open.

Hi, Good morning, just a quick one for me.

Sales were lower than production across a number of sites I'm. Just wondering is there anything specific.

And behind that and secondly, should we assume those ounces gets sold in Q4.

Hi, Kerry its Andrea I mean, we typically have some differences between production and sales at certain sites, so with a bit more pronounced.

In the third quarter, but there is not kind of one reason for it. It was just across I think four site. So all of those ounces were sold at the start of the start of Q4.

But maybe just a follow up on that if those ounces were sold do you have a sense of what the unit costs would have been in terms of the cash cost.

Yeah.

Lower just on the denominator effect.

Hello.

Yes, sorry, we will get back to you on that carry we do have that we'll get back to you offline on that.

Okay, great. Thank you.

Thanks.

And your next question comes from the line of Lawson Winder from Bank of America Securities. Your line is open.

Hello, Good morning, and thank you for your comments today. Thanks for taking the question I wanted to ask about parakeets use the capex outlook. So Andrea you mentioned one.

$1 billion of Capex for next year. Thank you for that guidance would there be.

Any major tailings raises for parakeets, you included in that and.

Looking out beyond 2023, what is kind of the.

The timing for tailing raises there.

Yes.

Yes.

Claudia listen I'll take this.

Thanks, Luke capital outlook for the next couple of years is really just stripping and they are continued tailings work.

That continues over the sort of spread and so it has a very flat profile for at least the next four years in terms of.

Where the capital expenditure would be.

Beyond that as we do the next phases in the pit we would then seek expansion.

Really from 27% 28 onwards.

So nothing lumpy or not.

Normal course, yes, we've now gotten into the closer to the base of those big dams have been built and really its now just every year the same amount of capital to keep raising.

And moving forward.

Okay. That's very helpful and then.

What.

Can you remind us what the tailings dam construction method is that was there and is there any work that you guys have to do in order to bring that.

Then into compliance with Canadian Dam Association standards.

Yes.

Hi morning, Lawson this is Ned.

The construction method in <unk> as a central line construction method and we are and have been always in compliance with.

Canadian Dam Association Canadian regulations for dam construction.

Yeah.

Okay perfect.

<unk>.

Also wanted to ask about the Tasiast labor agreement expiring at year end so.

First of all when did those negotiations start.

And.

Is there any sort of.

I guess I would say hot button issues that you could share with us sort of areas that need to be addressed in this upcoming agreement that you can share. Thank you.

Yes, maybe I'll take that and club jump in if you want I guess number one.

Right.

A three year collective labor agreement. So we have been through this.

Many times.

Yes.

It is a.

It is a process we're in.

In the middle of it.

The discussions are underway and as a result of that.

I don't really want to say much about it I think it's.

It wouldn't be appropriate for me to get into the terms of the labor negotiation on a call like this but I do expect.

As we have many times in the past.

This time again.

We'll work through it.

We recognize.

There is.

Yes.

There is inflation and Mauritania just like there is elsewhere in the world and that will certainly be part of our discussion but.

We expect.

Work through it and.

And.

Get it behind us by year end.

And when exactly did those negotiations sort of start in <unk>.

Was that fairly recently.

Yeah, so typically those agreements.

Prior to exploration it expires on December 31st So we really just entered into negotiations on the first week of November with the with the data we have.

Hi, Steve sort of opening discussions with them and as Paul mentioned, it's sensitive.

Pieces around that and we are just moving through it.

Okay.

Okay Alright.

All for me thanks very much.

Thank you.

Okay.

There are no further questions at this time, Mr. Paul Rollinson, I'll turn the call back over to you for some final closing comments.

Thank you operator, and thanks, everyone for joining us.

Strong third quarter, and really setting ourselves up for an outstanding fourth quarter and good launch and a 23.

Again, thank you for joining us and we look forward to catching up in person in the coming weeks. Thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect.

Please wait the conference will begin shortly.

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