Q4 2023 Kinross Gold Corp Earnings Call
Good morning, My name is Christian and I'll be your conference operator today at this time I would like to welcome everyone to the Kinross gold fourth quarter and year end results conference call.
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 like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw your question again press Star one. Thank you I would now like to turn the conference.
Over to Chris <unk>, Vice President of Investor Relations, Chris You May begin your conference. Thank.
Thank you and good morning.
Paul Rollinson, President and CEO, Tom Mackinnon Senior leadership team Andrea free barrel.
Timber wrote down for charcoal.
For a complete discussion of the risks or uncertainties, which may lead to actual results differ from estimates and forward.
Forward looking information please refer to page two of this presentation.
Our news release dated February 14, 2024, MD&A for the period ended December 31, 2023, and our most recently filed.
All of which are available on our website.
Now I will turn the call over to Paul.
Thanks, Chris and thank you all for joining us.
This morning, I will provide an overview of our fourth quarter and full year results.
Discuss our outlook for the business going forward.
I will review our achievements in the area, Yes gene.
I will then hand, the call over to Andrea to discuss our financial performance and guidance.
To review our operating performance.
We'll discuss our projects exploration initiatives the resource update.
Looking back we had a strong 2023.
Successfully delivered on our targets and are well positioned for another strong year ahead.
Our operations performed well.
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Our projects are advancing on schedule on budget.
Our exploration program is delivering value.
We are generating substantial free cash flow.
And our balance sheet is in excellent condition and continues to be labor.
With respect to the fourth quarter.
<unk> finished the year, resulting in full.
Full year production on the top half of our guidance range and costs at the low end of our guidance range.
Strong performance on cost was primarily driven by transparency on inflation it was incorporated into our targets.
Our focus on operational performance with strong production contributing.
<unk> results.
And favorable trends aren't great within our portfolio, because we wrapped up a great operations.
As always we will remain focused on cost control in 2024.
However, we are expecting a modest increase which andrea will discuss shortly.
The strong performance on cost was underpinned by our three highest margin assets.
Casitas with Coipa and Paragon sure.
She is imperative to our two top tier assets.
Together accounted for approximately 1.2 million ounces.
Adding him La coipa.
These three assets accounted for just over two thirds of our production.
And then any sick of approximately $1000 per ounce.
At Tasiast, we deliver record Shreveport and strong production in Q4.
Driving record full year production.
Tasiast, because our largest production contributor for the full year.
Yes. It was also our highest margin mine and largest free cash flow generator in 2023.
At La Coipa, we also saw very strong margins and free cash flow.
We are pleased with how the operation is performing.
The parents to we had another year of steady production.
And by strong mill performance and record recoveries.
And while Q4 grades were lower as.
It was the highest throughput quarter in recent years.
In the U S. We delivered a successful year with both production and costs across the U S operations performing well against our targets.
Round Mountain, we approved the phases open pit expansion securing strong production through the decade.
And bringing clarity of the future at round mountain.
Also at round mountain.
We are making good progress on our planned next stages of production.
<unk> underground and the gold Hill satellite opportunity.
Turning now to projects.
Our mill expansion of Tasiast and restart of La Coipa were completed in 2023 as far as the construction of our solar power plant at Tasiast.
In Alaska.
Construction of the managerial project is essentially complete.
And is on budget and on schedule for initial high grade production in the second half of the year.
At Great Bear.
We continue to make excellent progress.
Looking back to the time of the acquisition just two years ago, we started with no declared resources.
Today, we have approximately $2 8 million ounces of high grade MNI.
And an incremental $3 3 million of high grade inferred ounces.
In 2023, we added more than 1 million ounces of growth.
The <unk> underground resource from the initial resource we declared last year.
<unk> continues to support our view of a large long life high grade mining complex.
Additionally.
We continue to hit new high grade intercepts.
As outlined in yesterday's release.
We recently intersected nearly 390 grams per tonne across a true width of three five meters.
At a vertical depth of nearly a kilometer.
I would note that this whole was not captured.
Year end resource update.
Ongoing drilling on the property continues to demonstrate that this is a world class deposit and a tier one location.
In addition to drilling success other areas of the project are also advancing well, which.
Which will is going to elaborate on later on this call.
Before moving to our outlook I'd.
I'd like to comment on our year end reserve and resource update.
As expected our yearend reserves decreased over the prior year, primarily due to depletion.
As work advances on our new projects.
We're upgrading the quality of our resource through the addition of higher margin ounces.
Our measured and indicated resources remained stable at year end at approximately 26 million ounces.
While our inferred resources grew by approximately 1 million ounces.
Driven by a substantial increase in craft beer.
Moving to our outlook.
We are reaffirming our stable production profile.
'twenty 'twenty four is expected to resemble last year.
With production and Capex at similar levels.
However costs are expected to increase modestly as a result of inflation.
Production mix and mine sequencing.
Our production outlook for 2025 of 2 million ounces remains consistent with previous guidance.
And we are introducing another year production guidance and 2 million ounces in 2026.
Looking further ahead, we continue to expect production to remain around the 2 million ounce level through the end of the decade.
Maintaining production at this level wont require the approval of some of our pipeline projects.
Including underground opportunities at round mountain and curlew.
An open pit mine life extensions at La Coipa.
We will continue to advance these initiatives and we'll update you on our progress as we move forward.
With respect to capital allocation, we remain focused on debt repayment.
We reduced our debt level in 2023, and our balance sheet is in excellent shape.
We believe a continuation of debt reduction remains an optimal use of excess cash.
We will also continue paying a competitive dividend of three <unk> per share quarterly.
Before turning over to Andrea I'd like to comment on some of our achievements in ESG.
In 2023, we once again demonstrated our strong commitment to ESG by operating responsibly and advancing our strategy across this important area.
Our 2023 sustainability and ESG report, which we will publish in May will provide a detailed review on our ESG performance and initiatives throughout the year.
Some highlights from this past year include.
The construction of the solar power plant at Tasiast.
Which helps move us closer to our goal of reducing emissions intensity by 40% by 2030.
In the area of social we made approximately $10 million of monetary and in kind contributions through site investments, including two.
The University of Nevada, Commerce Research station near our La Coipa mine in Chile.
And establishing the Kinross, Alaska future leaders scholarship at the University of Alaska Fairbanks.
The goal of the scholarship is to advance the inclusion of underrepresented people within the resource industry.
With that we'll now turn the call over to Andrea.
Thanks, Paul This morning, I'll review financial highlights from the quarter and full year provide an overview of our balance sheet and discuss our guidance and outlook.
As Paul noted we finished the year with production of just over 2.1 billion outfit exceeding the midpoint of our guidance range.
In the fourth quarter, we produced 547000 ounces Q.
Q4 sales of 565000 ounces are slightly above production due to timing.
Our Q4 cost of sales of $976 per ounce and $8853 per ounce were higher compared to the prior quarter as expected primarily due to lower production at Paragon.
For the year cost of sales of $942 per ounce was below the $970 guidance midpoint, driven by strong cost performance across the portfolio.
Concept parakeets you were on plan in 2023 and are expected to increase in 2024 due to lower planned production.
First strong at $998 per ounce sold in Q4 and $1003 per ounce sold for the full year.
Our adjusted earnings per share was 11% in Q4 and 44 for the full year.
Adjusted operating cash flow was $407 million in Q4, and approximately $1 $7 billion for the full year.
Attributable Capex was $298 million in Q4, and one point out of $5 billion for the full year.
Attributable free cash flow in Q4 was $117 million and for the full year was $560 million.
Turning to the balance sheet, we finished the year, having further strengthened our financial position.
After repaying $190 million of that in the quarter. We ended the year with approximately $350 million in cash and approximately $1 $9 billion of total liquidity, our net debt improved to $1 $9 billion at year end from $2 billion a.
Q3.
We repaid the $50 million outstanding on our revolving credit facility in October and then the $140 million balance on our cash inflow in December the <unk>.
His loan was repaid early with cash generated from the past if operation, resulting in interest savings of approximately $35 million assuming current rates over the original term to 2027.
Our trailing 12 month net debt to EBITDA ratio continued to trend lower as they finished the year just above one times.
In 2023, as a whole we reduced our total debt by approximately $360 million.
As Paul mentioned, we aim to further de lever our balance sheet in 2024 as they plan to allocate excess free cash generated this year against the 2025 term loan.
The term loan will be reclassified to current in our Q1 financials given its maturity in March 2025.
Turning to our guidance and outlook as Paul indicated 2024 is expected to look similar to 2023 and our portfolio continues to generate strong and stable returns.
We are forecasting production in the range of $2 1 million ounces remaining consistent year over year.
For costs, we're guiding $2020 per ounce for cost of sales.
<unk> hundred $60 per ounce for all in sustaining cost expected cost of sales of a $1020 per ounce is up approximately 5% compared with our $970 per ounce guidance from 2023.
The expected increase is driven by three factors.
Modest inflation, which had subsided compared with recent years by has not gone away.
Sales mix is slightly more of our production coming from our U S operations, which operate with higher costs.
And a temporarily lower production and therefore higher cost year compared to choose mine plan.
Attributable capital expenditure guidance of 1.15 billion for 2024 is in line with 2023.
Approximately $550 million of this capex is expected to be non sustaining in 2024.
Production is expected to be higher in the second half of the year as man show comes online.
Cash flow is also expected to be stronger in the second half as a result of the protection profile as well as our typical timing of payments related to taxes in the first half of the year.
Our 2025 production guidance of 2 million ounces remains unchanged from our guidance update last year.
Looking ahead to 2020 stacks as Paul noted we've introduced another year of production guidance of 2 million ounces in line with 2025 and in line with our expectation for production of approximately 2 million ounces through the decade.
Based on currently approved projects attributable Capex is expected to be $850 million in 2025 and $650 million in 2020. However, as we continue to approve additional projects to sustain our production level. We expect Capex will ultimately remained stable around one.
Billion.
I'll now turn the call over to Claude to discuss our operations.
Thank you Andrea.
Last question, where I began by sharing the details of our homegrown safety Excellence program.
Thanks, Ian Jinyan, Baltimore approached fostering our safety culture.
The program has now been delivered to over 6000 employees and business partners worldwide.
With 44 different nationalities participating.
We are proud of this program, we will be relentless keeping safety as a core piece of our operating loss.
Moving onto our operations as Paul highlighted.
We delivered a strong into the year.
Excuse me, our full year targets on both production and costs.
I am pleased to say this is a testament to the strong focus.
Dedication to operational excellence that our team demonstrated over the course of the year.
Our two cornerstone operations does isn't buckets, you had another year of significant blocks.
These two assets provided over half of our emphasis and drove meaningful cash flow for our business.
In 2023, we continue to advance our projects at Tasiast in the Quickbooks, which was successfully completed Brian to the new year.
At Tasiast, we achieved record full year production of 621000 ounces.
<unk> from strong throughput and grades.
In the fourth quarter, the mill demonstrated highest throughput over the prior quarter, reaching a quarterly average rate of approximately 22000 tons per day.
Having a strong final quarter of production.
61000 ounces.
Yeah.
Cost of sales of 645, those plants in the fourth quarter.
Close to the portfolio.
And this was our lowest cost producers in 2023.
Cost of sales of 661 pass.
We are anticipating another strong year for Tasiast.
<unk> guided to be around 610000 ounces higher throughput is boosted by lower mine grades.
Margins are anticipated to be robust again this year.
With cost of sales expected to be $670, perhaps.
Our sense is so powerful.
<unk> is now complete with the first power being delivered in December we.
We will be ramping up throughput.
Awesome.
Attitude and another year of substantial upwards with full year production of 598000 ounces.
But actually in Q4 was lower than Q3 as previously indicated.
Demand CPUC, resulting in lower grades.
<unk> performance continues to be a standout with excellent throughput and recovery performance in Q4.
Production in 2024 and is expected to be lower cost higher.
Mine sequencing continues to transition through lower grade portions of the pit before moving back into higher grade next year.
After the quake was strong operating performance continued in Q4 with record quarterly production of 74000 ounces.
This was driven by higher throughput and strong grades.
Full year production of 260000 ounces exceeded the top end of guidance, while cost of $691 per ounce came in below the low end of guidance.
Strong free cash flow.
The quick one is expected to have another strong year with a target of 202000 ounces and a cost of sales of $800 per ounce.
Moving to the U S assets and a strong final quarter with production of 194000 ounces at a cost of sales or $1304 per ounce, both improving over the prior quarter.
Full year production of 694000 ounces at a cost of sales or $1319 per ounce was achieved.
Production across the U S assets is expected to increase this year 750000 ounces.
Cost of sales of $1350 per ounce.
The increased production is due to the expected contribution from <unk> in the second half of the year and higher production from bold mountain on higher planned well steffi rates and higher grades.
At Fort Knox Q4 production of 84000 ounces.
Decreased over the prior quarter, mainly due to higher mill throughput.
As mentor construction is essentially complete the mining activities, including all money and some colleagues have commenced.
Construction of the mill modifications at Fort Knox also continues to progress.
Construction of the conveyors and associated buildings, along with the interior piping and mechanical installations will continue throughout the quarter.
The commissioning and operational readiness team is preparing for pre commissioning activities.
At Bald mountain.
Q4 production of approximately 44000 ounces improved over the prior quarter on higher grades.
A big drive lower cost of sales.
In 2020 full board amount that is expected to have a stronger year with grades increasing in the back half of the mine.
Plenty.
At round mountain production of approximately 56000 ounces was lower over the prior quarter.
Due to a few ounces coming from the Leach pads.
While cost decreased due to the lower input costs and timing of inventory movements.
As Paul mentioned I worked at round mountain is advancing on plan.
Stripping our phase this has commenced and the operations team is in place.
Detailed engineering that expansion has been completed and construction activities are on track.
Production from phase remains on schedule to begin in the second half of 2025.
The amount that is expected to produce at a level similar to 2023 production coming from ongoing mining at phase W. Two.
With our projects complete and the operational momentum we are seeing across all of our months, we are well positioned to deliver another strong year in 2024.
With that I will now pass the call over it.
Thanks, Claude ill start by expanding on round mountain right updates on earlier, great bear and our exploration initiatives before ending with a few comments on our year end resource up there.
At round Mountain in addition to our ongoing work on the open pit phases. The cord discussed we continue to focus on exploring and studying our higher grade potentially higher margin underground opportunities phase IX and goldfield.
We are progressing well with the exploration decline at Pes as having developed for 275 meters space, which is over half of combined development. The initial exploration decline.
This has put us in closer proximity to the target mineralization for <unk>, allowing us to commence exploration drilling along the periphery of the target earlier this year.
This drilling is already hit a high grade narrow vein coarse visible gold something we have seen throughout our history and round mountain, which has ultimately led to positive reconciliation and we are pleased to see this trend continuing at depth.
We will continue development of the exploration decline in parallel with the exploration and definition drilling and we'll be in a position to start definition drilling of the primary phase IX targets by Q2.
Our gold Hill infill drilling from the bottom of the open pit and exploration drilling from surface continue to advance as planned.
Stepping back we remain excited about the underground opportunities around them.
See the potential for <unk> to come online in late 2026, our early 2027 and gold Hill to come online towards the end of the decade extending production at round mountain into the next decade.
Moving to clearly based on our results.
<unk> continue to trend well for further work on the assets.
Through 2023 exploration, we increased the size of the inferred resource by 34% as we confirmed extensions and continuity within several key zones of mineralization.
We have now delineated approximately 400000 ounces of measured and indicated and 700000 ounces of inferred resources with strong grades of around six grams per tonne.
You will recall last quarter, we released results of full $11 68, with 14 meters at $16 five grams per tonne down dip at the Roadrunner yourself.
Which was both wider and higher grade that our existing resource.
As you can see on the slide at the end of the year. We received assay results from a few more standout intercepts showing higher grade and wider potential and the <unk> zone, including <unk> 13, 12 showed 27 meters at over 12 grams per ton.
This higher grade results are not included in this current resource update.
Our focus this year will be to follow up on this higher grade wider mineralization encountered both that Roadrunner and style and to continue advancing exploration efforts.
The higher margin wider more continuous zones within our existing resource.
We continue to study curlew to optimize the potential value and determine the best path forward for this asset.
Moving onto great bear.
As Paul indicated our 2023 drilling program exceeded our expectations delivering a significant resource addition of more than 1 million ounces.
The year over year increase was primarily driven by higher grade underground additions to the inferred resource at depth enabled by the success of directional drillers.
This resulted in a 45% increase the inferred resource and a 28% increase in for Greg.
The significant FERC rate increase was driven by the new underground resource having come in at a higher average grade of six grams per tonne driving the overall inferred resource range of $4 five guys.
The total project resource now stands at approximately $2 8 million ounces of measured and indicated and $3 3 million ounces of inferred resources.
As a reminder, scope of 2023 drilling program was primarily to add underground resources at depth in the main lp's off the air.
Execute on this plan, we introduced directional drilling which was very effective allowing us to meaningfully increase the underground resource at LP.
As you can see on the slide our primary resource additions came from new higher grade underground resources between 501000 meter levels, showing a significant extension to the op diesel.
These extensions clearly continue to demonstrate our thesis of this orogenic deposits continuing with strong grades at depth.
You can also see on the slide that we continue to intercept high grade mineralization beyond our current resource additions at that.
A particular note is for BRL 43 shown with the star just to the left of center, which intersected 389 grams per tonne over a mindful with three five meters.
Given the timing of this drilling is intercept didn't make it into this resource update but this whole along with all the other assays. We see continued to support our view that this will be a high quality long life underground mine following the initial open pit.
While the <unk> zone represents the bulk of our resource expansion. We also saw some growth at Amgen limb more classic Red Lake style deposits and as noted last quarter. Some multiple high grade intercepts at hinge from the directional drilling well below the current resource again showing potential for future extensions at depth.
Engine limb continue to show potential to supplement production from the <unk> zone in the future and demonstrate the significant optionality of our land package.
Looking to this year's exploration program, our strategy will be similar to last years with a primary focus on further expanding the mineralized zones at <unk>, including both the Central LP area and extensions of discovery and Vigo.
We will also continue to look for additional deposits along strike and for expansions of our Red Lake style mineralization at <unk>.
'twenty 'twenty four program will be comprised of approximately 120 kilometers of drilling.
Our program will continue to target a expansion of the underground resource. However, it's worth noting as planned drilling will be deeper progress on resource additions is expected to be more modest than realized in 2023.
Moving to other areas of great. Dr. As a reminder, we are advancing across <unk> streams.
Underground decline through which we plan to obtain a bulk sample and perform definition of infill drilling that may help you zone and the main project, which includes the mine mill and related infrastructure required for production.
The <unk> decline the mining lease for the main surface footprint has been received providing us with the necessary surface and mining rights to develop aes subject to obtaining the required provincial permits fees.
Feasibility level design and engineering is now complete.
The surface design for <unk> as shown here on this slide and detailed engineering for the <unk> infrastructure is well underway for.
Provincial permanent <unk> remains on track.
Procurements for long lead items, such as the camp our infrastructure and water treatment is underway and we are targeting a potential start of the surface construction or <unk> in the second half of the year subject to receipt of permits and potential started the underground declines in mid 2025.
For the main project continued to advance technical studies, including engineering and field tests work campaigns. The results of this work will be outlined in our plan for the second half.
The initial project description.
Been submitted to the impact assessment agency of Canada.
<unk> commencing in federal assessment process the.
The detailed project description is expected to be formally submitted shortly.
Comprehensive baseline study program encompassing air noise Hydro geology, geochemistry archaeology water quality in several other categories continues to advance. These studies underpinned our indigenous consultation of permitting efforts.
Our exploration team was very active in 2023.
In addition to the drilling success that great Bear. We also saw strong developments from within our portfolio of brownfield and Greenfield prospects are.
Our brownfields program, which accounts for approximately 90% of our exploration budget consisted of more than 200 kilometers of drilling last year taken place primarily within the footprint of existing mines and projects, where we are targeting higher grade potentially higher margin deposits possible extensions within our current pits.
As detailed in our press release. This program demonstrated notable results across several locations, having already discussed round mountain I'll start with our other U S assets.
Fort Knox program focused primarily on two main areas for growth around the Fort Knox pit and on deeper underground targets within the band of I am sure though.
That man show near mine exploration work took place at six targets and the exploration program was expanded to include several new targets identified near the main road corridor.
At Bald mountain drilling focused on near term resource growth, which resulted in an addition to the reserve.
Moving to Tasiast RC drilling testing for extensions of the North satellite area successfully intersected mineralization and prove the continuity of our Milan structure, along the primary greenstone belt.
This year, we will look to further explore on trend of this mineralization.
In addition, deep drilling plan for this year will begin targeting extensions at West branch commence and prolongation with the aim of supporting an underground mining scenario at Tasiast.
Moving to Chile, our brownfields drilling program uncovered potential porphyry mineralization approximately eight kilometers due north of our mining facilities.
At La Coipa, we completed approximately 15 kilometers of drilling to test the extent of near surface oxide mineralization proximal to current and historic pets and.
In Brazil recent drilling of soil anomalies, primarily to the northwest appeared to have revealed similar style of mineralization and grades and the same post packages.
Further drilling at several untested soil targets will take place this year.
Moving to our Greenfields program, approximately 52 kilometers of drilling was completed across Manitoba, Nevada at our JV project in Northern Finland.
Our large snow Lake land package, Manitoba continued to show exciting potential for high grade gold mineralization associated with share hosted a court's findings.
And Nevada, RC drilling was completed across several prospective properties with the potential for low sulfur nation at thermal and Carlin style gold mineralization.
In Finland, we continue to advance exploration on the <unk> property alongside our joint venture partner.
Moving to our broader reserve and resource update as Paul mentioned, our reserves decline. This year as we are in a phase of resource growth focused on adding higher grade ounces at earlier stage projects, such as crate bear curlew and round mountain Undergrounds are.
Our measured and indicated resources remained stable at approximately 26 million ounces in inferred resources were up more than 1 million ounces driven by the previously discussed high grade additions at great bear in further.
We are excited by the significantly higher grade of these inferred resources, increasing the quality of our overall resource base and providing potential for future high margin production.
I will now turn it back to Paul.
Thanks will.
After delivering on our commitments in 2023, we intend to carry this momentum into 2024.
Our business is well positioned to deliver another strong year, both operationally and financially.
I'm looking forward, we remain excited about our future.
It was strong production profile we have.
Generating significant cash flow.
We have an investment grade balance sheet.
We have a competitive dividend.
We have an exciting pipeline of exploration and development opportunities across several attractive jurisdictions.
And we're very proud of our commitment to responsible mining it continues to make us a leader in ESG performance within the industry.
With that operator, I'd like to open up the line questions.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad. Your first question comes from the line of Ralph <unk> from eight capital. Please go ahead.
Okay.
Thanks, operator, good morning, Paul and team I want to ask a question on a great bear and.
Are there any indications that you can give us on how this ore body.
Into the PAA is holding up at a higher cut off grades.
Yes, we can.
You can see some of it in the cross section in the lower.
Long sections that we've provided.
Presentation today, but we are seeing.
So some pretty high grade areas coming in at depth.
That's reflected in the fact that our new resources and Hanford has come in at about six grams a tonne.
So we're finding it.
We are continuing to see what we were hoping to see which is the continuation of that orogenic system at depth.
And changing.
The cutoff grade for the open pits it's <unk>.
Fairly insensitive, but just given that there's a very high grade ore.
And on the underground it's the same thing where we've got bulkier mining software.
We can we can be reasonable with our cutoff grades.
Got you okay.
Thanks for that and maybe this is a question for Andrea.
Just looking at the 2025 and 2026 my understanding was that those are going to be higher stripping gears at Tasiast as you get into whats West branch and so I'm just wondering what are some of those potential offsets in that non sustaining category that has this sort of trailing off.
Okay.
In CRE and 25% and 26.
Correct.
Yeah.
Yeah.
We'll have to get back.
Actually on that one.
It's out there a bit.
Let us youre right. It is.
Higher strip, but theres a lot of moving.
Hi, Susan minuses, there so let us on.
Let us take that offline and come back yet.
Okay. Thanks for that.
Maybe just a.
Potential timelines on approvals at Carlo maybe this is sort of further out as well but.
Its an interesting project given our proximity jurisdiction and grades just wondering sort of if you look out a little bit potentially when we could see sort of the next milestone on studies.
Okay.
Yes, no the <unk>.
You already have the permits are in place.
Already for example.
The restart of mining haulage milling.
Really what we are.
Focused on is.
It's getting.
The approval to put a dry stack sales on top of the existing channels.
And again, we're working that through the system.
I don't I don't have a definitive timeline on that Tom.
As I say, we're in good shape across the board Thats, the last sort of chapter and we're.
We're pursuing that at the same time as we're continuing to grow the resource and get into the economics. So it's all moving in the right direction, but.
Definitive answer on that.
Yeah, and I think we're really focused on value engineering and try and trying to optimize the underground to sign in the economics and the margin.
So the timeline is more around us internally, making a strategic decision the permitting is progressing well and right now we don't believe that's going to be the critical.
When it gets more drilling on these high grade areas.
I can get some of that higher margin material into the mine plan.
Gotcha, all very interesting thanks very much.
Your next question comes from the line of Josh Wolfson from RBC capital markets. Please go ahead.
Yeah, Thanks, very much on the reserve side of things for.
<unk> was there any more information available about some of the changes in.
Some of the numbers reported there.
Yes. The changes there that you saw you would have seen that we had a bit of a decrease in the reserve beyond just accretion.
And that really came that also as a result of some value engineering work that we did there really focused on near term cash flow.
So a big piece of those ounces that were removed from the reserve is higher strip material around the periphery of the ore body.
Okay.
We were required to do the stripping and that was impacting grade.
So the lower end in the near term in the next few years.
So we pulled that out of the plan. It takes out some houses at the very end of life of mine, but it increases our cash flow over the next few years materially.
So.
That's the majority of whats happened with those ounces.
Okay, and then for great fare and I might be.
Asking us a bit too early before a bulk sample has been done but a lot of it a lot of drilling has been done here.
I'm, assuming an increased understanding of what the LP underground sort of looking like any thoughts on maybe what the blended.
Diluted grade would be in a mining situation for that area.
Yeah, I mean, we did indicate that we do put stope shapes around our resource given our inferred resource. So I don't know that not everyone always done.
Does put in some internal dilution.
So we are what we're seeing with those stope shapes coming in the new inferred resource that's around six grams, a tonne overall on average the underground grade.
If we looked at the inferred and was stripped out deal.
It's over five grams a tonne.
We'll continue to see what happens and how that Directionally booths.
Got it Okay and then.
Last question, just looking at quite Bob I saw a bit of additions there.
Yes.
Net of depletion, but some some incremental.
I'm just trying to understand maybe what the options are the companys weighing between.
Extension there.
When we could see some of the potential upside in reserves.
Or maybe the other sort of a bigger development opportunity there or if thats something that could be pursued in the next five years, but just trying to understand how should we think about this mine.
Three or four years. Thank you.
Okay.
Yes.
Again, I'll start and maybe will can chime in.
As you know we have a large land package.
We have several oxide chips.
And we've got visibility of production through 'twenty seven.
Really it's a bit on the permitting exercise to continue with lay backs.
And the pitch from our operating and operating and at the same time, we thought.
We'd be doing some drilling on some of those satellites. So.
Our vision for La Coipa is to see.
Production continue out towards the end of the decade.
And in parallel.
We are starting to ramp up our baselines.
Uh huh.
As it relates to mobile Martech.
The vision for <unk> continued oxide.
Spansion.
Permit.
Our strategy with <unk>.
Although coming into next year in parallel to.
To transition from La coipa at some level or at the end of the decade.
And you can see in our reserve and resource tables that we've got a fairly substantial resource there and that's when we talked earlier about our focus on.
Got it.
Sequencing over time to track Berg from our resources into reserves.
As a matter of focus for us at La Coipa.
And on that 27 to 2030 range, we can pull some of those resources into reserve through the permitting of the Geo Tech work and drilling work that we're doing.
Thank you very much.
Your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.
Thank you a question for Paul and Andrea regarding the capital cost estimates going out to 25, and 26 850 and $650 million.
And I understand that doesn't include several projects, but should we be thinking around $1 billion a year to sustain that 2 million ounce production rate going going forward is that the right number I think you've talked about that.
Yes, that's exactly right.
And again, that's how we think about it so.
Again, we have the capital in place to deliver the $2 million that we put into guidance.
And as we look out beyond that guidance.
We will be looking to bring projects.
And.
Sanction.
Things in the pipeline and so I would expect that.
As we do that our capital will come back up.
And of the $1 billion range as we continue to print now we've often said.
We're generally about $1 billion of capital.
Total.
Sustaining and growth and a $2 million run rate. So that's the right way to think about.
Okay, great that's it for me.
Your next question comes from the line of Kerry Mccurry from Canaccord Genuity. Please go ahead.
Hi, good morning.
Maybe just back on great. There so with the new resorts are you thinking about.
Any differently.
Is that still going be more focused on the open pit or is there enough underground critical mass now that it will be more balanced between the two.
Yeah.
It'll be focused on both the open pit and the underground obviously there.
As you guys can see and the reason arent strong strong open pit starter for the first substantial production, but certainly what we've seen in the underground and what we've released.
Will allow us to have an underground component and that pega as well.
And Youre still thinking about 10000 tonnes a day.
Yes.
Okay, and then maybe just a quick.
Quick one just in terms of the quarterly sequence of the year.
We normally see in Q1 drop off any guidance you can give on what we should expect with Q1 and maybe the <unk> to slip.
On production.
Yes.
What was the question Kerry.
Just the quarterly sequence in women typically we see.
Q4 is.
Lower Q1 was just some guidance you can give us there.
Sure Kerry for this year for US I think we are.
In our remarks, he talked about second half being.
Higher and Thats with banjo coming off but I would say first half is somewhere in the 48% 49% of our fall.
Their production.
And then the second half and above.
About 50%.
And I think Q1 <unk> EBIT.
We've seen in the past kind of a step up each quarter, all year, but more about H, one H two alright, okay.
So we do typically have seasonality through the year I mean, we're.
For example in Alaska.
Late a little slower in the winter.
<unk> setup.
Thanks move a little better than that.
As you know.
We get into the rainy season in Brazil.
That prevents us from buying in the lower portions of the pit so we tend to mining higher.
Areas with lower grade. So there is a seasonality generally in our business you can sort of take Q1 times for <unk>.
Try to give a flavor for that.
Through the year I would just add that obviously free cash flow, followed that trend as well, but on top of that.
We've got some kind of annual tax payments Capex and.
The first half.
More free cash in the second half.
Yes, Ian.
First quarter and second quarter.
Okay, and then maybe one last one just on that.
Should we expect similar level of this year or.
Should we be thinking higher than that potentially.
On debt reduction.
Yeah, I mean, we're focused on repaying debt in 2023, we repaid $360 million and 190 of that within Q4.
No.
If you think about similar production.
In 24 similar Capex.
And that cost a little higher might be a little bit lower than that but at 2000 somewhere around a $300 million range.
Sort.
Sort of where we're thinking.
That's it for me thanks.
Yeah.
Your next question comes from the line of Lawson Winder from Bank of America. Please go ahead.
Hi, Thank you very much operator, and good morning Kinross team.
Thanks for taking my questions. A couple from me first of all on the cost assumptions.
And again I apologize if I missed it but did you know what the inflation assumption was for 2024 versus <unk> 23, and then what what was the realized 2023.
Inflation versus the budget of 5%.
Sure. So overall I'll start with a look back so looking back at 2023.
Inflation was around sort of in line with our expectations that we talked about a 5% inflation factor in 2023 and.
That's where we came in looking forward.
Yeah were seeing labor and contractor costs continue to increase.
Overall inflation or at least starting to return to normal levels normal lap all of them in our cost guidance in 2024, we've got somewhere around a 4% inflation factor on 2020 forecast.
Okay.
Okay, and Thats with yeah.
Oil price assumption being down about.
17% versus the 2023 assumption.
Our oil price assumption and.
85.
For 2024.
Oh, Okay got it.
I also wanted to.
Revisit the Capex question, just a little bit to think about how to bridge the gap from $8 50 to a $1 billion in 2025. So that's about $150 million and then and then had a bridge that $350 million gap from $6 $50 billion to $1 billion in 2026. So in 2025 would that be phase <unk>.
That would be bridging that gap and then.
That additional $3 50 in 2025, which.
Which projects should we think about spending bridging that gap.
Yes.
Obviously these are all in study phase it keeping in mind, but it's actually something where the capex. There is essentially just continuation of mining.
So that is one that that would be an earlier see what I'm, saying and we couldn't be spending money on that in 2025 currently and the same thing that's somewhere we could be spending some money in 'twenty five and into 2026.
<unk>, we will continue continue to spend money on Capex and a few different areas.
Before finishing the main project and then look coipa extensions as well by 2026 week spending money there.
Okay. That's very helpful and then.
If I could just revisit the seasonality question on the guidance, particularly for <unk>.
Brazil.
Would you be comfortable providing a percent a breakdown in terms of like percentage of the 510000 ounces and each one versus versus what percent you would expect in <unk> for <unk> two.
Yeah.
Oh.
Yeah.
While we're getting that Lawson just to correct, what I said earlier, our Oh, Okay, I am showing is actually $75 in our guidance.
Okay. Okay. Thanks, thanks for that.
That's what I thought so but that would be down 17% from the the 90 last year, but obviously that realized price was only 77 or <unk> 78 last year or so.
So virtually oil price assumption is in line versus last year, just slightly off and then 4% inflation.
So it goes in to answer your questions do breakdown, it's about 45% in the first of the 50 <unk>.
Finally in the backend.
Obviously, the last quarter is the one movie.
Really bang on ASIC months old.
I was wondering do you have the rainy season.
Where we are in.
For this year.
It gives us a little bit.
Yeah.
Okay.
Okay. Thank you all very much.
Yeah.
Your next question comes from the line of Anita Soni from CIBC. Please go ahead.
Morning, guys. Thanks for taking my questions and most of them have been.
Asked and answered.
One question still did have I just want to confirm the new material that was added in Dixie Army underground I think by my calculation that was a little north of six Gram per ton is that correct.
That's correct Joe.
And that was all underground and Swiss franc.
Yes, the additions were overwhelmingly underground.
Alright, and then secondly on I'm, a little bit more on the capital number I know in 2025.
You should stop spending really on for.
Fort Knox with the Oh, sorry with Nashville.
Coming into production.
Okay.
Kind of want to understand what would what would come in there to fill that gap. So is there can you just remind me which the projects.
Could be turned on in 2025.
In 2025, we will also still be spending on faith basketball will be finishing up stripping there and in the round mountain underground again for making this decision to move forward with that we will just keep going with development, it's going to be spending meaningful dollars on an underground development in that year and the curlew extension, if we see what we want to see in these underground.
Extensions.
We will start to spend on infrastructure there.
Okay. So just to understand I mean, right now you've got a production profile that 2.1, and then Q flat really for the next couple of years for sure and you know obviously with additional projects can maintain the 2 million ounces, but the capex numbers that you have right now.
That has 1 billion $8 50, and then $6 50.
That fully funds the 2 billion anything approval over and above that is to extend mine life beyond 2026 is that correct.
Yes of course, the $2 million guidance.
The capital that we put out.
The capital comes up.
It will extend the $2 million beyond.
Yes.
Both the curlew and round mountain phase that have potential to start contributing in 2027.
She and the outcomes studies.
Okay.
Alright, and then just another quick one that I was wondering about.
At Tasiast I'm sorry.
Costs are are coming in pretty well can you just talk about the infill.
Inflationary pressures that you're seeing.
Are they lower than the rest of the regions and is there more inflation youre seeing in sort.
So the U S and in Chile.
Can you just sort of I guess the question is the breakout of like inflationary pressures by region.
I mean, I can start kind of at a high level I think.
As I said, we're seeing.
And the biggest increases continuing on labor and contractor and probably the highest and then South America, primarily Brazil, and then I'll ask our D.
Second along with Nevada.
I think it's fair to say that Tasiast is kind of on the lower.
Okay.
Okay, Alright, and then my more detailed questions about the U S ops I'll take offline with Chris. Thanks.
Yeah.
Your next question comes from the line of Jackie <unk> from BMO capital markets. Please go ahead.
Okay.
Alright, thanks, very much for taking my question and I noticed there's been sort of answered, but I just wanted to circle back on great bear.
It sounds like you've got some really good opportunity here at the L Pizza and with this <unk> decline that you're putting in and I was wondering if you could maybe talk a little bit of a as you as you're working on.
This study is there the.
The technical studies could you maybe talk about your thinking about potential too.
To expand the footprint of great bear or where are you are you thinking said the besides that you've mentioned in the past is already.
Fully optimized even if even if theres a mortgage discover there.
We were still kind of kind of centered around that 10000 tonne per day Mark for now in terms of kind of total total processing capacity at least we're still doing final design engineering around variety of things from the overall footprint perspective.
But what we're seeing is because what we were hoping to see which is extension that would indicate that this could be.
Long life underground mine.
But it is not pushing us.
Drive that throughput is higher.
Yeah.
Okay. That's helpful. So so the way to think about it with future exploration success. At this point is maybe it offsets a grade or or until like the blind. Okay. No. That's helpful. Thank you.
Okay, Yeah, that's the LIFO added the grade profile.
That's significant production volume.
Okay.
Okay.
You very much.
And that concludes our question and answer session I will now turn it back to management for closing remarks.
Thank you operator, thanks, everyone for joining us.
Hope to catch up with you in person in the coming weeks. Thank you.
This concludes today's conference call. Thank you for your participation and you may now disconnect.
Thank you.
Yes.
Yeah.
Yes.
Okay.
Yes.
Okay.