Q3 2024 Kinross Gold Corp Earnings Call
Speaker Change: Thank you for standing by and welcome to the Ken Ross Gold 3rd Quarter 2020 4 results conference call and webcast. All lines have been placed on mute to prevent any background noise.
Speaker Change: After the speakers remarks, there will be a question to answer session.
Speaker Change: If you would like to ask a question during this time, simply press star, follow by the number 1 on your telephone keypad.
Speaker Change: If you would like to withdraw your question, press the star one. Thank you. I'd now like to turn the call over to David Schaver, Senior Vice President of Ken Ross Gold. You may begin.
David Schaver: Thank you and good morning. With us today we have Paul Rollminson CEO and from the Ken Ross Senior Leadership Team Andrea Freeborough, Claude Schimper, Will Dunford and Jeff Gold.
David Schaver: for a complete discussion of the risks and uncertainties which may lead to actual results differing from estimates contained in our forward-looking information.
David Schaver: Please refer to...
David Schaver: H2 of this presentation, our news released stated November 5, 2024, the MDNA for the period ended September 30, 2024.
David Schaver: and our most recently filed AF, all of which are available on our website. I will now turn the call over to Paul.
Paul Rollminson: Thanks David. And thank you all for joining us. This morning, I will provide an overview of what was another strong quarter for us.
Paul Rollminson: Just ask high-level updates on our operations and projects and give firm our outlook.
Paul Rollminson: I'm then having to call over to Andrea Claude and Will.
Paul Rollminson: to provide more detail.
Paul Rollminson: T3 was another excellent quarter for us, building on our strong performance in the first half of the year.
Paul Rollminson: Our portfolio of minds continues to perform very well.
Paul Rollminson: As of 23, we had produced just over three quarters of our four-year production with Claude's tracking in line with our guidance range.
Paul Rollminson: Our ability to hold costs in this rising gold price environment continues to benefit our margins.
Paul Rollminson: In Q3, we grew our operating margins by 14% over the prior quarter compared to a 6% increase in the gold price.
Paul Rollminson: As a result, we generated record quarterly free cash flow of $450 million.
Paul Rollminson: An increase of approximately 20% compared to the prior quarter.
Paul Rollminson: For the first nine months Free Cash Flow was over $900 million.
Paul Rollminson: We have continued to allocate excess free cash towards debt repayment.
Paul Rollminson: and have now repaid $650 million out of the $1 billion term law.
Paul Rollminson: We're looking ahead, we are in a strong position to make further repayments to the term loan before year-end.
Paul Rollminson: With respect to operations, our production in the third quarter was strong, delivering 564,000 ounces and a cost of sales of under $1,000 per house.
Paul Rollminson: Our two largest assets, TAS used in paracatoo, both performed well, with production increasing at both sites over the prior quarter.
Paul Rollminson: Tassies had another excellent quarter delivering exceptional free cash flow from high margin production.
Paul Rollminson: Here at G2 also has a standout quarter with higher production and cash flow over the prior quarter.
Paul Rollminson: At La Coiepa, we remain on track to deliver our production guidance.
Paul Rollminson: and our U.S. operations production was on plan and higher over the prior quarter as a initial production from higher grade mancho commenced in early July.
Paul Rollminson: Moving to updates on our project activities.
Paul Rollminson: We continue to make good progress across the portfolio in the third quarter, including the addition of two senior executives.
Paul Rollminson: The Renotable Large Scale Project Construction Experience in Ontario and Chile.
Paul Rollminson: These additions come at an important time as we focus on our project development priorities that create their own global market.
Paul Rollminson: At Lobo Marta, we see an excellent long-term potential for another long-life low-cost asset with meaningful production.
Paul Rollminson: at Ram Mountain we continue to advance phase X.
Paul Rollminson: With drilling, demonstrating exciting grades and wits, which will speak to you later.
Paul Rollminson: With respect to great bear, we continue to make excellent progress.
Paul Rollminson: As discussed during our PEA presentation in September.
Paul Rollminson: We have illustrated the top tier potential of the SASSAT.
Paul Rollminson: The PEA Outline Significant Annual Production of Approximately 500,000 ounces.
Paul Rollminson: and Robust Cashflow with an impressive, all-insistaining cost of approximately $800 per ounce.
Paul Rollminson: The study outlined Strong B's case economics.
Paul Rollminson: and a current spot prices, the project generates an impressive MPV and IRR.
Paul Rollminson: with the Modest Financial Project Capital Requirement.
Paul Rollminson: As we indicated, the PEA represents only a point in time estimate.
Paul Rollminson: and we continue to see geologic attention to support a multi-decade mine life.
Paul Rollminson: So the Great Barra AEX program, permitting and detailed engineering continue to advance.
Paul Rollminson: We recently reached an important AX permitting milestone with the submission of our final closure plan to the Ontario Ministry of Mides.
Paul Rollminson: We expect approval of the closure plan shortly, allowing for commencement of early works construction.
Paul Rollminson: Regarding permitting for the main project, we continue to work with the Impact Assessment Agency of Canada.
Paul Rollminson: on the impact statement, which we plan to file next year.
Paul Rollminson: In addition to the project I just touched on, our team also continues to advance our study work and other opportunities.
Paul Rollminson: and we look forward to providing more updates on this work in 2025.
Paul Rollminson: Moving to our outlook.
Paul Rollminson: With strong gear to date performance, we are well positioned to meet our full year production in our Skydance.
Paul Rollminson: Our continued focus on operational performance.
Paul Rollminson: Strong Grains at multiple assets and rigorous cost discipline are driving record margins in free cash flow.
Paul Rollminson: In addition, we are also advancing exploration to further support the future of our business.
Andrea: With that, I will now turn the call over to Andrea.
Andrea: Thanks Paul. This morning I will discuss our financial highlights from the quarter provided an overview of our balance sheet and comment on our guidance.
Andrea: Our third quarter performance with strong, with production, costs, and cash flow all improving over the prior quarter.
Paul Rollminson: We produced 564,000 ounces with sales of 551,000 ounces and remained on track for full year production of 2.1 million ounces.
Andrea: Costs of sales with $980 per ounce, improving from $1,029 per ounce in the prior quarter.
Paul Rollminson: With an average relays gold price of $2,477 per ounce, we delivered strong margins of approximately $1,500 per ounce.
Speaker Change: Margins improved from approximately $1,300 for ounce in a prior quarter and as Paul noticed this improvement outpaced being created in the average reliance gold price.
Speaker Change: All in sustaining cost was $1,350 for ounce and was lower over the prior quarter, primarily on higher gold sales.
Speaker Change: For the first nine months, caused the sales with $997 for ounce and we are on track for our guidance of $1,020 for ounce for the year.
Speaker Change: In Q3, our adjusted earnings were 24 cents per share and adjusted operating cash flow with $625 million, both improving over the prior quarter.
Speaker Change: Capital expenditures were $276 million in the third quarter and $772 million in the first nine months.
Speaker Change: In Q3, we generated $450 million of a attributable free cash flow, or $350 million, excluding positive working capital changes.
Speaker Change: You're today, we have generated an impressive free cash flow of $906 million.
Speaker Change: Turning to the balance sheet, our financial position continued to strengthen in the third quarter.
Speaker Change: After repaining $200 million against the term loan in Q2, we repaid an additional $350 million in the third quarter, and then made another $100 million payment last week.
Speaker Change: In total, we have repaid $650 million this year, leaving $350 million outstanding.
Speaker Change: Looking forward, as Paul mentioned, we expect to continue to maintain this against the balance for the end of the year.
Speaker Change: Over the last 18 months, we've reduced our net debt by approximately $1 billion, and are netted to EBITDA from 1.7 times to 0.5 times as a BNFQ3.
Speaker Change: which is back to guidance. We remain firmly on track for all of our team metrics.
Speaker Change: I'll now turn the call over to Claude to discuss our operations.
Speaker Change: Thank you, Andrew.
Claude Schimper: Starting with our most important value safety, I'm pleased to say that our Global Safety Excellence Program, which was launched in 2023, has now been completed by over 70% of the workforce, including both employees and business partners.
Speaker Change: Under the spirit of continuous improvements in building our successful track record, this quarter we finalized our health and safety brand called Safe Ground.
Speaker Change: which represents the importance that generous place is not only on physical safety but also psychological safety and respectful workplaces.
Speaker Change: By reinforcing the importance of creating a culture which everybody feels they are on safe ground to speak up.
Speaker Change: Moving on to our operating performance.
Speaker Change: As Paul indicated, our operations performed while in Good 3.
Speaker Change: That is the limit production of 162,000 ounces at a cost of sales of $688 per ounce in line with a prior quarter.
Speaker Change: Production Benefit from St. Wilmore Performance, with throughput increasing to a new record.
Speaker Change: As this was once again our lowest cost asset, driving significant free cash flow.
Speaker Change: The slightly lower grades and maintenance planning of the fourth quarter, that is remains on track to the latest 40th production guidance of 610,000 ounces and across the sales of 670 dollars per ounce.
Speaker Change: At parameter 2, production of 146,000 ounces and a cost of sales of $1,006 per ounce improved over the prior quarter, driven by stronger grades and recoveries.
Speaker Change: As planned, the mine sequencing has started to transition into the higher grade portions of the pit, which is expected to support higher production next year.
Speaker Change: Proactor 2 remains on track to meet its 2024 production guidance of 510,000 ounces at a cost of sales of $1,080 per ounce.
Speaker Change: At La Coipa, Q3 production was 51,000 ounces at a cost of sales of $1,074 per ounce.
Speaker Change: Throughput at La Coypa is being managed, while mill optimization initiatives are being implemented.
Speaker Change: Production remains on track for a full year target of 220,000 ounces.
Speaker Change: Moving to our U.S. operations, production of 205,000 ounces was driven by a strong contribution from our operations in Alaska.
Speaker Change: Our US sites remain on track to achieve fully a guidance range of 730,000 ounces at a cost of sales of $13.30 per ounce.
Speaker Change: In Alaska, production of 120,000 ounces was higher compared to the prior quarter on record mole grade in recovery, as production commenced from the higher grade manager during the quarter.
Speaker Change: Construction and commissioning of the Ford Rafts mill modifications were completed in Q3, with the project now fully transferred to the operations team and is performing as planned.
Speaker Change: Cost of sales of $973.00 was lower over the prior quarter, primarily due to the higher production from Manchur.
Speaker Change: At Round Mountain, production of 42,000 ounces was lower over the prior quarter due to fewer ounces stacked and recovered from the heap leach pads, as per our planned mining sequence.
Speaker Change: The cost of sales of $1,540 was in line with the prior quarter.
Speaker Change: At Phase S, mining remains on track, and construction of the heap bridge bed expansion was completed on schedule in Q3.
Speaker Change: Phase S production is expected to begin in the second half of next year.
Speaker Change: With that, I'll now pass the call over to William to discuss our projects.
William: Thanks, Claude. Moving to updates on our projects. At Round Mountain Phase X, development of the exploration decline continues to progress well, with over 2.7 kilometers developed thus far.
Speaker Change: Exploration drilling has also progressed well and in Q3 we started infill drilling of the primary phase X target which is shown in purple on the slide.
Speaker Change: The infill drilling has shown exciting results, as is highlighted by the red stars on the slide, with multiple high-grade intercepts of strong widths, including DX-71, which intersected approximately 37 metres at 10.7 grams per tonne.
Speaker Change: Opportunity drilling this year outside of the primary exploration target has also shown strong grades and widths, indicating potential to expand mineralization at phase X.
Speaker Change: Of particular note, DX-52 intercepted an impressive 30 grams per ton, over 32 meters, and 11.5 grams per ton, over 23 meters, outside of the original exploration target.
Speaker Change: We are pleased with these results which continue to support our hypothesis of potential for higher margin mining from a bulk underground at phase X.
Speaker Change: Moving to Curlew Basin, exploration drilling this year has continued to expand mineralization in the lower areas of our resource where we see good margin potential on the back of strong grades and widths.
Speaker Change: As you can see on the slide, a recent hole at the cell zone returned approximately 14 grams per ton over 10 meters, well outside of our existing resource.
Speaker Change: We are encouraged with the results on both exploration and mine plan optimization, which are highlighting areas with good mining woods and strong grades.
Speaker Change: As Paul mentioned, we recently welcomed a new senior executive to our team in Chile to oversee the progression of Lobo Marte, and we are currently advancing baseline studies.
Speaker Change: As a reminder, we published a feasibility study on Lobo in 2021, which highlighted a high-quality development project located in close proximity to the La Corpa mine.
Speaker Change: Lobo Marte has significant potential for high margin production driven by the strong heap leach grade of 1.3 grams per tonne and a low strip ratio of 2 to 1.
Speaker Change: The asset has significant scale with the study highlighting 4.7 million ounces of production over a 16-year-mine life with the average annual production of approximately 300,000 ounces.
Speaker Change: Strategically, Lobo has the potential to be a key low-cost contributor to our production profile in the 2030s.
Speaker Change: Lastly, with respect to Great Bear, as Paul noted earlier, we released a PEA in Q3 which showed robust economics, impressive margins, and a quick payback, as you can see highlighted on this slide.
Speaker Change: In addition to the impressive geology and economics of the project, our significant technical work to date has also demonstrated a clean and straightforward project across the board.
Speaker Change: including clean metallurgy with high recoveries of over 95%.
Speaker Change: a straightforward 10,000 ton per day milling circuit, competent geotechnical conditions, a robust tailings management strategy, and significant production flexibility from combined open pit and underground operations.
Speaker Change: It's important to note that these strong PEA results are just the beginning of the value story at Great Bear.
Speaker Change: This is a point-in-time estimate showing only a window into the underground potential based on the drilling we have been able to do from surface prior to April of this year.
Speaker Change: As you can see on the slide, we also already have multiple intercepts well below the PEA resource with strong grades and widths, demonstrating continuity of the system at depth and the significant potential for further expansion of the resource.
Speaker Change: Given we have already drilled out a PEA inventory providing a robust 12-year mine life and demonstrated continuation of mineralization beyond that, we will be wrapping up deep drilling from surface at LP this year and shift our focus to progressing the advanced exploration decline.
Speaker Change: which will provide a platform for infill drilling from underground.
Speaker Change: This provides more efficient drilling than from surface at these depths.
Speaker Change: As you can see on the slide, there is an 18km trend at Great Bear which has seen limited drilling to date as we have largely been focused on drilling off the resource at LP on approximately 4km of that trend.
Speaker Change: We look forward to sharing those results with you through 2025.
Speaker Change: I will now turn it back to Paul for closing remarks.
Paul Rollminson: Thanks, Will.
Paul Rollminson: Following a strong third quarter and first nine months, our business is positioned for a strong end to the year.
Paul Rollminson: Looking forward, we are excited about our future.
Paul Rollminson: We have a strong production profile.
Paul Rollminson: We're generating significant free cash flow.
Paul Rollminson: We have an investment grade balance sheet that is continuing to strengthen.
Paul Rollminson: We have an attractive dividend.
Paul Rollminson: We have an exciting pipeline of both exploration and development opportunities.
Paul Rollminson: and we are very proud of our commitment to responsible mining that continues to make us a leader in sustainability.
Paul Rollminson: With that, operator, I'd like to open up the line for questions.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: Your first question comes from the line of Josh Wolfson from RBC Capital Markets. Your line is open.
Josh Wolfson: I just wanted to ask on ManchO, very strong results this quarter, it looks like both the contribution from throughput and grade, is there any visibility you have into the sustainability of some of these results, maybe more so on the throughput side, which probably has more likelihood of being sustained?
Josh Wolfson: Thank you.
Speaker Change: Good morning, Josh. Yeah, so we've reached a sort of stable production from that as we get a mill roughly 180 to 2,000 tons a quarter from that chuck.
Josh Wolfson: So we're at a stable rate and
Josh Wolfson: Depending on the grade that we put in, the feasibility of it, we will manage it through the year, so we expect it to be consistent with what we've been able to do so far.
Speaker Change: Thank you for joining us. Thank you. Thank you.
Speaker Change: Okay, maybe just more specifically, you know, 380,000 tons this quarter is pretty high and above steady state. Are there some characteristics of the ore that would prevent that from happening going forward or is that a reasonable forecast going forward?
Paul Rollminson: and Chris Lichtenheldt.
Speaker Change: We're balancing it with the transportation, so roughly $200,000 per quarter from ANCHO, but also the Fort Knox production that's being balanced. The hardness of the ore is predicted to be stable over the coming years.
Speaker Change: Thank you for watching. Please subscribe to my channel. See you in the next video.
Speaker Change: Okay, thank you.
Speaker Change: And then a question maybe on the CAPEX side, if there's any visibility we have at this point into future numbers.
Speaker Change: I know there's a number of projects the company is looking at, you know, evaluating going forward in terms of extending asset duration.
Speaker Change: How should we think about CapEx in upcoming years, the number this year being 1050, plus accounting for inflation and maybe what the discretionary spending would be at current gold prices? Thank you.
Paul Rollminson: Thank you.
Speaker Change: Sure, Josh. So yeah, as you said, our capex this year in 2024 is $1.05 billion. Looking forward, I'd first start by saying that we are still just in our budget process now, so we're looking at this now.
Speaker Change: expect that you know it'll be not significantly above where we were this year with just maybe adjusting for some inflation or what we're seeing as we look at it today.
Josh Wolfson: The debt repayment schedule looks like it will be resolved within the six months that the term loans do. I guess the easy part of the capital allocation seems to be done in terms of debt repayment that was identified earlier this year. How do you think about allocating that free cash flow going forward in the context of let's call it reasonably stable capex?
Paul Rollminson: and debt no longer being as high of a priority. Thanks.
Speaker Change: Sure, Josh, Paul, I'll take that one.
Paul Rollminson: Look, our philosophy hasn't really changed. We've been consistent in our philosophy on capital allocation. As we've said, it's needs of the business.
Paul Rollminson: Our business, we keep it well-maintained. We keep it well-maintained because that reduces risk. After the needs of the business, obviously the balance sheet, and as you fully agree,
Paul Rollminson: We're making a good headway on taking out that term loan and I expect it'll be depending upon the gold price early in the new year. And then it comes down as you look forward, it's really a question of...
Paul Rollminson: you know, internal growth versus return of capital. But I would say, I guess I'm...
Paul Rollminson: Sadly you know this morning as I look at what's happening with the gold price it's a good reminder that we don't want to get too far ahead of ourselves. It'll be gold price dependent and we'll
Speaker Change: We'll no doubt get that question as we take out the term loan and get into the new year, but you know, it's
Speaker Change: It'll be somewhat call price dependent.
Speaker Change: Great, thank you very much
Speaker Change: Thanks.
Speaker Change: Anita, your line is open.
Anita: Sorry I put myself on mute there, sorry about that. First question is, well firstly congratulations on a solid quarter particularly on the cost control. I was wondering on the US operations.
Speaker Change: As we look on Bald Mountain, you stacked a lot and it seems like, you know, that's that's in the inventory. Like, how do we think about.
Speaker Change: um the production volumes next year and into 2026. I'm assuming I was tempted to add some ounces in 2026 from residual leach but I'm not sure how that that works out in the next two years. Could you just give some clarity on Bald Mountain?
Speaker Change: Yeah, obviously at Bald Mountain we expect fairly stable production next year and then based on what's in the current inventory and the current pits, that would start to taper off after next year. But obviously we're looking at different optionality around additional pits and laybacks at Bald Mountain that could continue that production profile out for longer.
Speaker Change: Okay, so you stop mining at the end of 2025 and then some residual leach in 2026 still? Is that still on plan?
Speaker Change: Yeah, just based on the current pet stats without approving any new projects.
Speaker Change: Secondly, Round Mountain, how does that, I mean the volumes trended down a little bit this quarter, does it still dip into the first half of next year before it picks up? I thought I read that you had constructed a new leach pad and I'm just wondering when that starts to come on stream.
Speaker Change: Yeah, I think next year our plan has always been that we will have lower production next year because we're getting to the bottom of phase W right now and we're in the process of stripping phase S.
Speaker Change: construction of the heap leach pad which is great because we're putting you know ounces on fresh liner but we do expect a lower production profile next year before starting to ramp up again with phase s in 26 and 27.
Speaker Change: Okay, so to wrap it up, just my question is driving towards going from 2.1 million ounces to 2 million ounces next year. The major driver, I guess, would be Round Mountain with some offset from Fort Knox, Mancho, Ramsey.
Speaker Change: Okay, and yeah, there's a bit of a higher production there, yeah.
Speaker Change: And then Tafia has a lower year next year, which that's nothing new. We've been talking about that. Yeah, okay. All right. Thank you very much. That's it for my question.
Speaker Change: Your next question comes from a line of Mike Harkin from National Bank. Your line is open.
Mike Harkin: Hi guys, congrats on the solid quarter. On round, like the underground just keeps, you seem to keep hitting this high grade pretty consistently, and looking at slide 18 with where you're putting in the infrastructure, a lot of it seems like it's right on the doorstep of that decline. Is that...
Mike Harkin: basically on design, and you'll be able to access some of those higher grade zones, it looks like, early, and just.
Speaker Change: Any kind of color you can provide in terms of how that's shaping up in terms of first access to OR.
Speaker Change: Yeah, first off, I think you interpreted it right in terms of where that drilling, that's why we're calling it the opportunity drilling. We were really doing it as we progressed the decline.
Speaker Change: So it is right there, the additional mineralization that we've run into. So that does make it very easy to access and get into. We still are looking at 2027 as the primary date for the start of fulsome operations.
Speaker Change: at Round Mountain, but obviously we may love to do some test stopes.
Speaker Change: things like that as part of our due diligence as we progress the project. And it's easy to do that given that that opportunity drilling is right beside the decline. And the decline itself is actually quite close to the primary target as well. So we're kind of right there in terms of transitioning to production.
Speaker Change: Is any of the development going right through ORE or are you kind of hard to tell from slide 18 but is it going through it?
Speaker Change: We have crossed the ore in our development. I think last quarter we highlighted some holes where we had the from and to and you can see in there that the from was zero, meaning that it was right at the face of the decline. So we have crossed a couple of different ore bodies there or mineralization zones.
Speaker Change: And just to remind us, what are you kind of thinking of in terms of average grade coming from the underground?
Speaker Change: excluding the impact of these high-grade MPILs.
Speaker Change: Yeah, the original target there was kind of a three to four gram bulk target really, as we had talked about at the beginning there, it was all about the geometry and the significant width that we see there, highlighted that in a few slides in the past.
Speaker Change: Obviously some of the intersections we've been having are higher grade than that, so that's a positive indicator. But you can see on the slide that we've really just started to drill off the main target, so we need to progress our work further before we have a more advanced and definitive view on the grade of the overall deposit.
Speaker Change: Okay, and will all this drill get backed into an updated resource for the year-end reserve and resource update?
Speaker Change: Not this year. Again, if you look just at the highlights on the slide, we clearly haven't drilled off that entire deposit, and there is some of that material that's already in our open pit resource. So before we do a conversion, we want to get widespread drilling across the deposit to be able to do a proper conversion. We'll do that next year.
Speaker Change: Okay. All right, thanks, Reyna. Now the great question.
Speaker Change: I was…
Speaker Change: I was just going to say on the grade question, obviously, in that three to four gram, we believed that was the right zone for positive economics. But clearly, based on the, you know, the grades we're getting, it seems to be trending to maybe something better than that, but we're just, we just haven't finished the work.
Speaker Change: Look forward to the update. Thanks, guys.
Speaker Change: Thank you.
Speaker Change: Your next question comes from a line of Kerry McCrory from Canaccord Genuity. Your line is open.
Kerry McCrory: Hi, good morning everyone. Maybe a couple of questions for Claude on La Croix, but can you just talk a little bit about the optimization initiatives that you're referring to there?
Claude Schimper: Good morning. Obviously, as we restarted this project, that's a pretty old mill and it needs a lot of care and maintenance. We're being very selective on what we do to make sure that it runs efficiently.
Speaker Change: So as you will have noticed in the last couple of quarters we've been putting a lot of effort into that
Speaker Change: and at the same time, we are blending the oar and maintaining our focus on reaching the
Speaker Change: Are there issues on the crushing side of the circuit or grinding or any color on what you're trying to optimize for?
Speaker Change: Now, as I said, it's a pretty old moment. It's stand for eight years, and it's at altitude with different humidity levels. So as we go through it, we've been able to identify some sort of...
Speaker Change: structural pieces.
Speaker Change: We're slowly working through those.
Speaker Change: Across the border in the Mull, we've had some challenges initially on crushing, but we've resolved those.
Speaker Change: Billing is not a problem, and we're now focused on filtration. The way I think about it, Kerry, is, you know, we're just really kind of moving little bottlenecks.
Speaker Change: We addressed the efficiency of one area, and we get that optimized, and then we'll move down the line and look at the next place where we can get...
Speaker Change: reliability, consistency,
Speaker Change: Thank you for your time. Thank you. Thank you.
Speaker Change: That's how I would think about it.
Speaker Change: And then maybe a question on Bald Mountain. You've got a lot of resource there, not a lot of reserve, and you've got that Juniper project. I'm just wondering if you could give us a bit of color on what the objectives of that could look like.
Speaker Change: I'll start and others can jump in. I mean, as you know, we've always said with BALD we have quite a large resource, about 4 million ounces.
Speaker Change: And we've also said that, you know, it's really a
Speaker Change: It's been a bit of a situation that's a bit more on the line, you know, everything internally has to compete for capital.
Speaker Change: and some of those opportunities that evolved, you really want to have a confidence in a higher gold price.
Speaker Change: The other characteristic of Baldo, which is unlike the rest of our mines, is instead of having one big pit where you're doing a massive layback, we have a whole bunch of little pits.
Speaker Change: So, you know, again, in the context of where we find ourselves in the gold price, we will be looking at some, you know, kind of quicker payback.
Speaker Change: satellite opportunities.
Speaker Change: Okay, thank you.
Speaker Change: Again, if you'd like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Tanya Jakuskinek from Scotiabank. Your line is open.
Tanya Jakuskinek: Great. Good morning, everyone. Thank you.
Tanya Jakuskinek: for taking my questions and congrats on a good quarter. Great there, so maybe over to Jeff.
Tanya Jakuskinek: Can you just walk us through exactly what we're waiting for on this permit, and then once we get this permit, assuming it's soon, what can be done over the winter? I'm just trying to see if we're working on a timetable here for the decline starting
Tanya Jakuskinek: next year. Thank you.
Speaker Change: Thanks for the question. I'll probably divide that up with Will when we get into the actual activities that we'll be doing in the winter. But with respect to permitting of Great Barrier, you're specifically asking about AAX, so I won't get into the federal IAC process.
Tanya Jakuskinek: But on the AAX front, there's a number of permits that we're waiting on and we're expecting very shortly.
Tanya Jakuskinek: You would have gathered from our press release that the first most important permit for which we require for any and all construction activity is the closure plan.
Tanya Jakuskinek: And we're obviously pleased to have been invited by the Ministry of Buyings to submit that for approval, which we have done, along with our financial assurance, and we expect to get that final approval very shortly. So that's the first kind of key permit.
Tanya Jakuskinek: Other permits also include, and that we're waiting on, a permit to take water from the Ministry of Energy, Conservation and Parks.
Tanya Jakuskinek: We are also expecting that in the near term.
Tanya Jakuskinek: And furthermore, we're expecting a tree clearing permit from the Ministry of Natural Resources and Forestry. And that permit should come immediately after the approval of our closure plan.
Tanya Jakuskinek: And then, as we look sort of more into 2025 and more advanced EAX activities, we're also
Tanya Jakuskinek: expecting and waiting on some additional permits from the Ministry of Environment, Conservation and Parks.
Tanya Jakuskinek: in respect of certain wildlife. But again, it's not a question of if on these permits, but when and expecting all of them in relatively short order. And I would say that
Tanya Jakuskinek: The last point I would make is that with respect to AAX and while we're waiting on these, they do not impact our overall main project timeline either.
Tanya Jakuskinek: Activities
Speaker Change: Yeah, on the activities generally, I'll just maybe turn that over to Will to talk about what we're going to do in the winter program. Sure, yeah. I mean, we could do the majority of our activities in the winter. Obviously, to get underground at AEX, the main scope of activities is building a portal pad and a box cut.
Speaker Change: So we can do excavation and we can do the fill for that facility over the winter, and we can also work on some of the auxiliary fill facilities that we'll put in place, maintenance shop, ventilation, fan, etc.
Speaker Change: So the majority of the work can be progressed over the winter. We're also going to continue to do geotechnical work for the wider project. We'll continue to do some RC drilling and obviously, as we alluded to on the call, exploration drilling. So the winter is not slowing us down in regards to that.
Speaker Change: Okay, that's good to hear. Just cold up there.
Speaker Change: Thank you.
Speaker Change: Maybe just then moving on to just the costing side. I don't know who wants to take this question, but just wanted to get a handle. And thank you, Andrea, for the CapEx for 2025. Just on the costing side, would it be safe to assume that, you know, you do have the 5% lower production outlook for next year. So that's going to impact your costs. And then we have the higher roll price that obviously also impacts your costs.
Speaker Change: on the upside from royalties paid.
Speaker Change: And then we have inflation. Maybe we can just kind of understand what is the inflation right now that you're seeing in your labor? Are you in that 5% for both your employees and contractors? I'm just trying to understand how my cost should look next year over 2024.
Speaker Change: Yeah, Tanya, I guess I'll start by saying again that we are just still in our budgeting process, but I can certainly make some observations. So you're right on the factors that you highlighted that will impact cost next year. The one other area I would note, and then I'll just come back to the inflation question, is just the production mix.
Speaker Change: So with Cassius being in just a lower production year based on mine plan sequencing, being our lowest cost asset, that will have a bit of an impact on overall cost as well.
Speaker Change: And then in terms of labor inflation specifically, yeah, I would say around the 5 or 6% increase is what we're expecting just for labor costs. That would be labor and contractors together. And then...
Speaker Change: aside from labor costs.
Speaker Change: inflation would be lower than that so averaging out somewhere in the 3% give or take for overall inflation on average.
Speaker Change: Okay, and so if I was...
Speaker Change: about that and obviously the...
Speaker Change: Yeah, as I said, we're just in our budget process, but, you know, maybe towards the
Speaker Change: towards the higher end of that five to two percent is kind of what we're thinking, but again we'll come out with more guidance, more specificity in February.
Speaker Change: Yeah, I mean, again, it'll be a combination of a few factors. There's obviously the numerator, denominator, we are going to be down a little bit.
Speaker Change: and you know there's the inflation and then there's the grade effect of where is the production coming from next year versus this year.
Speaker Change: And, you know, you got to sort of throw all of that into the hop and...
Speaker Change: That will, you know, suggest that costs will be up a little bit, but we haven't finished the work.
Speaker Change: And maybe, Paul, just to continue on that, I just want to talk about your reserves and cut-off grades. Obviously, that's another impact, right?
Speaker Change: And so I just want to make sure, just trying to get your understanding on what you're thinking about the pricing next year and cut off grades as well.
Speaker Change: We'll start here, Randall.
Speaker Change: Yeah, again, we're still doing the work. That's something we generally will put the pin in after we get through the budget process. Look, I would say, first of all, on the cutoff grades,
Speaker Change: We get that question a lot, given the gold price environment we're in. We're certainly not planning to do anything with our cut-off grades. Our mills are full. And so we'll just continue to stockpile low-grade material. No changes on cut-off grades.
Speaker Change: As it relates to commodity price assumptions, my expectation is
Speaker Change: that within the industry you'll see some upward movement from reserve and resource prices from where they were last year. We're still thinking about that. We're not actually
Speaker Change: you know, that impacted, but I think it's more of a movement towards, you know, the reality we're in. But I expect
Speaker Change: Across the board, probably there'll be a higher reserve and resource prices going forward.
Speaker Change: Okay, look forward to getting more of that next year. Thank you so much for taking my questions.
Speaker Change: And that concludes our question and answer period. I will now turn the call back over to Paul for some final closing remarks.
Paul Rollminson: Thank you, operator, and thanks, everyone, for joining us this morning.
Speaker Change: We look forward to catching up with you all in person in the coming weeks. Thanks for dialing in.
Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.