Q3 2024 Kinross Gold Corp Earnings Call
Subtitles created by the Amara.org community
Speaker Change: Thank you for coming and welcome to the third quarter 2024 earnings conference of Kinross Gold. All lines have been muted to prevent background noise.
Speaker Change: After the remarks from the parliamentarians, there will be a question and answer session.
Speaker Change: If you wish to ask a question during this time, simply press the star followed by the number 1 on your keyboard.
Speaker Change: If you wish to withdraw your question, press button 1 again. Thank you. I would now like to turn the floor over to David Shaver, Vice President of Kinross Gold. You may begin.
David Shaver: Thank you and good morning. With us today, we have Paul Rawlinson, CEO, and from the Kinross Senior management team, Andrea Freeborough, Claude Schimper, William Dunford, and Jeff Gold.
David Shaver: for a complete discussion of the risks and uncertainties that may lead to results different from the estimates contained in our forward-looking information.
David Shaver: Please refer to page 2 of this presentation. Our news release dated November 5, 2024. The MD&A for the period ended September 30, 2024.
David Shaver: and our most recently registered AIF, all of which are available on our website. I will now hand over to Paul.
Paul Rawlinson: Thank you, David, and thank you all for joining us. This morning, I will offer you an overview of what has been a strong quarter for us.
Paul Rawlinson: to discuss high-level information about our operations and projects and confirm our point of view.
Paul Rawlinson: I will now give the floor to Andrea, Claude, and Will.
Paul Rawlinson: to provide more details.
Speaker Change: The year 2-3 was another excellent quarter for us, building on our strong performance in the first half of the year.
Speaker Change: Our portfolio of mines continues to perform very well.
Speaker Change: Starting from quarter 3, we have produced just over three-quarters of our full-year production, with costs tracking in line with our guidance range.
Speaker Change: Our ability to control costs in this environment of rising gold prices continues to benefit our margins.
Speaker Change: In Q3, we increased our operating margins by 14% over the previous quarter, compared to a 6% increase in the price of gold.
Speaker Change: As a result, we generated a record quarter free revenue of 415 million dollars.
Speaker Change: An increase of about 20% compared to the previous quarter.
Speaker Change: For the first 9 months, the free cash flow was over 900 million dollars.
Speaker Change: and have now repaid 650 million euros due to the failure of 1 billion euros.
Speaker Change: With respect to operations, our production in the third quarter was strong, delivering 564,000 oz at a selling cost of less than $1,000 per oz.
Speaker Change: Our two largest assets, Tassius and Pericot 2, are performing well, with an increase in production at each site during the last quarantine.
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Speaker Change: Tassia has had another excellent quarter, delivering exceptional free cash flow from high margin production.
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Speaker Change: Eric Coutu also had a standout quarter with higher production and cash flow over the prior quarter.
Speaker Change: At La Coipa, we stay on track to deliver our production advice.
Speaker Change: and our operations in the United States. The production was planned and higher than the last quarantine, as the production of a taller penguin started in July.
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Speaker Change: Let's move on to the update on our project activities.
Speaker Change: We continue to make good progress across the portfolio in the third quarter, including the addition of two senior executives.
Speaker Change: who bring notable large-scale project construction experiences in Ontario and Tchélé.
Speaker Change: These additions come at an important time as we focus on our project development priorities at Great Bear and Lobo Marte.
Speaker Change: At Lobo Marte, we see excellent long-term potential for another long-term, low-cost asset with significant production.
Speaker Change: At Ram Mountain, we continue to advance Phase X.
Speaker Change: who have demonstrated exciting grades and breeding, which Will will talk to you about later.
Speaker Change: With respect to Great Bear, we continue to make good progress.
Speaker Change: As discussed during our PEA presentation in September.
Speaker Change: We have illustrated the potential of this high-level device.
Speaker Change: The PEA reports a significant annual production of approximately 500,000 oz.
Speaker Change: and a robust cash flow with an impressive all-in cost of about 800 dollars per ounce.
Speaker Change: The study outlined strong base case economics.
Speaker Change: And at current prices, the project generates an impressive NPV and IRR.
Speaker Change: for the modest necessity of an initiative capital project.
Speaker Change: As we have indicated, the PEA only represents a point of time estimation.
Speaker Change: and we continue to observe the geological potential to support a multi-decade mineral life.
Speaker Change: For the GREAT BEAR AEX program, the mediated and detailed engineering continues to progress.
Speaker Change: We have recently reached an important milestone of autonomy for the AEX, with the submission of our final closure plan to the Ontario Ministry of Mines.
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Speaker Change: We are awaiting the approval of the closure plan soon, allowing the commencement of the preliminary construction work.
Speaker Change: Regarding the key project, we continue to work with the Impact Assessment Agency of Canada.
Speaker Change: on the impact statement that we plan to file next year.
Speaker Change: In addition to the projects I have touched on, our team is also continuing to improve our research work and other opportunities.
Speaker Change: We expect to provide more updates on this work in 2025.
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Speaker Change: Let's move on to the tool.
Speaker Change: With a strong year-to-date performance, we are well positioned to achieve our full-year guidance on production and cost.
Speaker Change: Our continued focus on operational performance.
Speaker Change: and rigorous cost discipline leads to record margins in free cash flow.
Speaker Change: In addition, we are also making progress in exploration to increasingly support the future of our company.
Speaker Change: With that, I will now hand over to Andrea.
Andrea Freeborough: Thank you, Paul. This morning, I will discuss our key financial points from the quarantine, give an overview of our balance plan, and comment on our advice.
Andrea Freeborough: Our third quarter performance was strong, with production, costs, and cash flow all improving compared to the previous quarter.
Speaker Change: We produced 564,000 oz, with sales of 551,000 oz, and we remain on track for a total production of 2.1 million oz.
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Speaker Change: The cost of sales was $980 per ounce, improving from $1029 per ounce in the previous quarter.
Speaker Change: With a realized gold price of approximately $2477 per oz, we delivered strong margins of about $1500 per oz.
Speaker Change: Margins improved by about $1,300 per oz in the previous quarter. And as Paul noted, this improvement exceeded the increase in the average realized gold price.
Speaker Change: The cost of sampling was $1350 per oz and was lower than the previous year, mainly due to higher gold sales.
Speaker Change: For the first 9 months, the cost of sales was $997 per ounce, and we are on track for our guidance of $1020 per ounce for the year.
Speaker Change: In Q3, our adjusted earnings were 24 cents per share and the adjusted operating cash flow was 625 million dollars, which improved over the last quarter.
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Speaker Change: Capital expenditures were 276 million dollars in the third quarter and 772 million dollars in the first 9 months.
Speaker Change: In Q3, we generated $415 million in free revenue, or $350 million, excluding positive changes in working capital.
Speaker Change: To date, we have generated an impressive revenue of 906 million dollars.
Speaker Change: In return on the balance sheet, our financial position continued to strengthen during the third quarter.
Speaker Change: After repaying 200 million euros against the rent in Q2, we repaid an additional 350 million euros in the third quarter and we made another repayment of 100 million euros last week.
Speaker Change: In total, we have repaid 650 million euros this year, leaving a deficit of 350 million euros.
Speaker Change: Looking to the future, as Paul mentioned, we hope to continue making payments against the balance until the end of the year.
Speaker Change: Over the past 18 weeks, we have reduced our net debt by approximately $1 billion and our net debt to EBITDA from 1.7 times to 0.5 times by the end of Q3.
Speaker Change: With respect to management, we remain firmly on track for all our key metrics.
Speaker Change: I will now hand over to Claude to discuss our operations.
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Speaker Change: Thank you, Andrea.
Claude Schimper: Starting with our most important aspect, safety, I am pleased to say that our global safety excellence program, which was launched in 2023, has now been completed by more than 70% of the workforce, including employees and business partners.
Speaker Change: Hoping to continue improving and building our track record, this quarter we have finalized our health and safety brand called SafeGround.
Speaker Change: which represent the importance that Kinross places not only on physical safety but also on psychological safety and on respectful workplaces.
Speaker Change: by reinforcing the importance of creating a culture in which everyone feels they are in a safe space to talk about it.
Speaker Change: Let's move on to the operational performance.
Speaker Change: As Paul indicated, our operations performed well in Q3.
Speaker Change: Tassia has delivered production of 162,000 ounces at a cost of sales of $688 per ounce, in line with the prior quota.
Speaker Change: Production benefits from the performance of the stable soft, with the increase in input power to a new record.
Speaker Change: It was, once again, our low-cost asset, which leads to a significant waste drift.
Speaker Change: With a slightly low level and a maintenance plan in the forty-fourth, TASSIS remains on track to achieve its 4-year production guidance of 610,000 oz at a selling cost of $670 per oz.
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Speaker Change: In Paris 2, production increased by 146,000 oz and purchases increased by $1,006 per oz during the previous quarantine, driven by stronger grades and repairs.
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Speaker Change: As planned, the sequence of the mines has started to move into the higher sections of the building, which is intended to support higher production next year.
Speaker Change: The Character 2 remains on track for the 2024 production guidance of 510,000 oz at a selling cost of $1,080 per oz.
Speaker Change: At La Coipa, the Q3 production was 51,000 oz at a cost of sales of $1,074 per oz.
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Speaker Change: Screening at COIPA is adapting, while non-optimization initiatives are being implemented.
Speaker Change: Production is ongoing with a full target of 250,000 lb.
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Speaker Change: We will now move on to the American operations. The production of 205,000 oz was driven by a strong contribution from our operations in Alaska.
Speaker Change: Our American sites remain on track to achieve a guidance duration of 730,000 oz at a selling cost of $13.30 per oz.
Speaker Change: In Alaska, the production of 120,000 oz was higher than the last quarantine in terms of economy and repair, because production started at a higher level during the quarantine.
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Speaker Change: The construction and commissioning of the 4-mile modifications were completed in 2-3, but the project has now been fully transferred to the operations team and is proceeding as planned.
Speaker Change: The purchase cost of 973 pounds was based on the previous quarter, mainly due to the higher production of Mancho 4.
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Speaker Change: At Bald Mountain, we produce 43,000 oz at a selling cost of $13.26 per hour.
Speaker Change: The production of 42,000 oz at Grand Mountain decreased during the previous quarter due to low ozone storage and the recovery of eaplage, according to our planned mining sequence.
Speaker Change: The purchase cost, $1,540, was in line with the price of a previous quarter.
Speaker Change: At phase S, the mining is still ongoing. The construction of the HeatBridgeBad church expansion was completed on schedule.
Speaker Change: The production of phase S is expected to begin in the second half of next year.
Speaker Change: With that, I hand over to William to discuss our projects.
William Dunford: Thank you, Claude. Let's move on to the news about our projects. At Rail Mountain Phase X, the development of the exploration decline continues to progress well, with more than 2.7 kilometers developed so far.
William Dunford: Exploration has also progressed well, and in Q3, we started the infiltration study for the main phase target, which is shown in purple on the slide.
William Dunford: Drilling at the infiltration has shown exciting results, like the red stars on the table, with several high-grade and strong-length intercepts, including DX-71, which intercepted at approximately 37 meters at 10.7 grams per ton.
William Dunford: Subtitling ST' 501
Speaker Change: The opportunity for stepping out this year, outside of the primary exploration target, also showed strong seeds and depths, indicating the potential for expansion of mineralization at phase X.
Speaker Change: Of particular note, the Dx-52 intercepted an impressive 30 g per ton over 32 meters and 11.5 g per ton over 23 meters outside the original exploration targets.
Speaker Change: We are satisfied with these results, which continue to support our hypothesis of the potential for higher margin mining from a PESAX basement switch.
Speaker Change: While passing through the Curlieu Basin, this year's exploration of the mine continued to expand the mineralization in the lower zones of our resource, where we see good margin potential on the back of strong grades and thickness.
Speaker Change: As you can see on the slide, a recent hole in the cell area returned about 14 grams per ton over 10 meters, well outside of our existing resource.
Speaker Change: We are encouraged by the results on the exploration and optimization of the mining plan, which highlight areas with good mining timber and strong seeds.
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Speaker Change: As mentioned by Paul, we have recently welcomed a new senior executive to our team in Chile to oversee the progress of Lobo Marte, and we are currently advancing in the baseline studies.
Speaker Change: As a memento, we published a feasibility study on Lobo in 2021, which outlined a high-quality development project located near the La Coipa mine.
Speaker Change: The Lobo Marte has significant potential for high-margin production, driven by the strong grade of 1.3 g per tonne and the low ratio of 2 to 1.
Speaker Change: The asset is large in size, with a production state of 4.7 million ounces over a mine life of 16 years, with an annual production of approximately 300,000 ounces per year.
Speaker Change: Strategically, Lobo has the potential to contribute to a significant production profile in the 2030s.
Speaker Change: Finally, with respect to Great Bear, as Paul mentioned, we launched a PEA in Q3 that showed a robust economy, impressive margins, and a quick payback, as you can see in this table.
Speaker Change: In addition to the impressive geology and economy of this project, our significant technical work so far has also demonstrated a clean and simple project through the plan.
Speaker Change: including key metallurgy with high recoveries of over 95%.
Speaker Change: a simple and fast 10,000-ton-per-day milling circuit, competent geotechnical conditions, a robust acceleration management strategy, and significant production flexibility through combined opening and training 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: It's a weather condition that only shows a window into the potential underground based on the study we were able to do of the surface in April of this year.
Speaker Change: As you can see on the table, we also have several intercepts well below the PEA resource, with strong grades and thickness, demonstrating the continuity of the system at depth and the significant potential for resource expansion.
Speaker Change: We have already rolled out a PEA inventory that offers a robust 12-year life and demonstrates continued mineralization beyond that. We will complete the deep rollout from the surface to the LP this year and shift focus towards advancing the advanced exploration decline, which provides a platform for infill rollout of the abyss.
Speaker Change: This offers more effective agriculture than on the surface at these depths.
Speaker Change: Thanks to the subtitles created by the Amara.org community
Speaker Change: In parallel with the development of the AEX, we are also excited to shift our exploration focus towards regional targets on the 120 km2 land package, seeking opportunities at the opening and under cover.
Speaker Change: As you can see on the slide, there is an 18-kilometer trend at Great Bear, which has seen limited drilling so far, as we have largely focused on drilling the resource at LP over about 4 kilometers of this trend.
Speaker Change: We expect to share these results with you throughout the year 2025.
Speaker Change: Thank you, Will.
Speaker Change: Following a strong third quarter and the first 9 months, our company is positioned for a strong end of the year.
Speaker Change: In the future, we are excited about our future.
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Speaker Change: We have a strong production profile.
Speaker Change: We generate a significantly free flow of waste.
Speaker Change: We have a high-value investment election plan that continues to strengthen.
Speaker Change: We have an attractive dividend.
Speaker Change: We have a very exciting exploration and development opportunity pipeline.
Speaker Change: and we are very proud of our commitment to responsible mining which continues to make us leaders in sustainability.
Speaker Change: With this type of operator, I would like to open the line for questions.
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Speaker Change: Thank you. We will now begin the question and answer session. If you wish to ask a question, press the 1 button on your phone to raise your hand and join the queue. If you wish to withdraw your question, simply press the 1 button again.
Speaker Change: Your first question comes from the line of Josh Wolfson of RBC Capital Markets. Your line is open.
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Josh Wolfson: Thank you very much. I just wanted to ask the question about Manchot. Very strong results this quarter. It seems to be the contribution of both throughput and grade. Is there any visibility on the sustainability of some of these results, perhaps more on the throughput side, which is probably more likely to be sustained?
Speaker Change: Hello, Josh. We have reached stable production from 180 to 2,000 tons per Penguin shift.
Josh Wolfson: Perhaps more specifically, 380,000 tons this quarantine is quite high and above the stability stage. Are there characteristics of the ore that would prevent them from occurring in the future? Or is it a reasonable forecast for the future?
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Speaker Change: We balance with transportation, about 200,000 tons per district of penguins, but also the production of Fort Knox which is balanced. Gold is expected to be stable in the coming years.
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Speaker Change: Thank you.
Speaker Change: And then perhaps a question on the CAPEX side, if there is any visibility at this point in the future figures.
Speaker Change: I know that there are many projects that the company is evaluating in terms of extending the duration of assets.
Speaker Change: How should we think about CAPEX in the coming years, with the number of years from now being 10, 50, taking into account inflation and perhaps what discretionary spending would be for current gold prices? Thank you.
Speaker Change: Thank you.
Speaker Change: Of course, Josh. So, yes, as you said, our CAFX for this year, in 2024, is 1.05 billion. Looking ahead, I will start by saying that we are still in our budgeting process, so we are examining that now, but I hope it is not significantly above what we were last year, perhaps adjusting a bit for inflation. That's what we see when looking at it today.
Josh Wolfson: I think that the efficiency of money allocation seems to be done, in terms of debt repayment that was identified a year ago. How do you think about allocating this free cash flow in terms of a truly stable CAPEX?
Speaker Change: and the debt is no longer a priority. Thank you.
Speaker Change: Of course, Josh. I'll take that one.
Speaker Change: 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.
Speaker Change: We keep our company well maintained because it reduces risks. After the needs of the company, of course, there is the balance plan, and as you have heard,
Speaker Change: We are off to a good start with the use of this rent, and I hope it will lead to good results.
Speaker Change: depending on the rise in the price of gold at the beginning of the new year. And then, looking forward, it's really a question of...
Speaker Change: on internal growth versus the return of money.
Speaker Change: Unfortunately, this morning, looking at what is happening with the price of gold, it's a good reminder that we don't want to go too far ourselves. It will depend on the price of gold, and we...
Speaker Change: We will, no doubt, receive this question when we withdraw the rent and enter the new year, but you know, it's...
Speaker Change: It will be somewhat called price-dependent.
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Speaker Change: Your next question comes from a line of Anita Sony from CIBC World Markets. Your line is open.
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Speaker Change: Anita, your line is open.
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Anita Sony: Sorry, I put the phone on silent mode, sorry. The first question is, first of all, congratulations on a solid quarter, particularly on cost control.
Anita Sony: I had a question regarding operations in the United States. At Bald Mountain, you have stored a lot, and it seems to be in the inventory. How do you think about the production volumes for next year and in 2026? I assume that I was tempted to add quantities in 2026 from the residual sampling, but I'm not sure it will work in the next two years. Can you provide some clarity on Bald Mountain?
Anita Sony: Subtitling by Société Radio-Canada
Speaker Change: Obviously, at Bald Mountain, we hope for a fairly stable production next year, and based on the current inventory and existing facilities, it could start to decline after next year. But obviously, we are looking at different options around additional facilities and returns at Bald Mountain that could continue this production profile for a longer time.
Speaker Change: Yeah, just based on the current pet stats without approving any new projects.
Speaker Change: Secondly, on the mountain, the volume has tightened a bit this week. Does it stay in the first half of next year before it starts to stick? I read that you built a new plaster, and I'm wondering when it will start to stick.
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Speaker Change: I think that next year, our plan has always been to have lower production because we are reaching the end of phase W and we are in the process of phasing out phase S. We have completed the construction of the Heableach track, which is great because we are putting millimeters on fresh line, but we hope to have lower production next year before returning to phase S in 2026 and 2027.
Speaker Change: Finally, my question is about the transition from 2.1 million ounces to 2 million ounces next year. I assume the most important driver would be the round mountain, with a bit of offset from Fort Knox, Penguin, Rampion.
Speaker Change: OK. And the winter production is low.
Speaker Change: And then, Tassia has a lower year the following year, which is nothing new, we talked about that. Yes, okay. Thank you very much, that's all for my questions.
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Speaker Change: Your next question comes from a line of Mike Harkin from National Bank. Your line is open.
Mike Harkin: Hello everyone. Congratulations on the solid quarantine. Over the course of the year, the basement area seems to continue reaching this level of height quite regularly. And looking at page 18, where you put the infrastructure, many things seem to be at the beginning of this decline.
Speaker Change: On the design, and you will be able to access some of these higher areas, it seems early. Give us a refresh. You have indeed heard a lot of development. Are we still looking at the first production in 2027? Is it leaning towards the border, the end of the year 2027 or the year 2028? What kind of insight can you offer in terms of how this is shaping up in terms of initial access to OR?
Speaker Change: Yes, first, I think you interpreted it well in terms of the opportunity to study. We really did it by advancing the decline.
Speaker Change: towards the main exploration objective of the OpenPit.
Speaker Change: This is exactly where we have additional mineralization, which makes it very easy to access and enter. We are still looking at the year 2027 as the main date for the start of the Folsom operation.
Speaker Change: at Round Mountain, but obviously, we would like to do test stops, things like that, as part of our due diligence as we progress in the project.
Speaker Change: It's easy to do, given that the opportunity for agriculture is next to the decline. The decline itself is quite close to the primary goal. We are at that level in terms of transition to production.
Speaker Change: Are there any developments that go directly through the gold? It's a bit difficult to tell from page 18, but is there one? Or is there one that goes directly through?
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Speaker Change: We have crossed the ore in our development. I think that the last quarantine, we highlighted poles where we had cheeses and roofs. You can see in there that the cheese was at zero, meaning it was directly facing decline. We went through a few different ore bodies there, or mineralization zones, I should say.
Speaker Change: Excellent. And just to remind us, what do you think in terms of an average grade coming from hell?
Speaker Change: and other.
Speaker Change: excluding the impact of these high-grade infiltrations.
Speaker Change: and Marie-Hélène Lévy. Thank you all.
Speaker Change: The original target was a target of 3 to 4 grams. As we said at the beginning, it is about the geometry and the significant thickness that we see there. This was highlighted in a few images from last year. Obviously, some of the intersections we have seen are of higher size, which is a positive indicator. But you can see on the page that we have really started to unscrew the main target. We therefore need to progress our work more and more.
Speaker Change: before obtaining a more advanced and definitive view on the total deposit level.
Speaker Change: Okay. And will all this drill get back to them in an updated resource for the year-end reserve and resource update?
Speaker Change: This is not what is there this year. Once again, if you look at the highlights on the table, we clearly have not fully deployed the entire deposit. And there is some of this material that is already in our opening resource. So, before making a conversion, we want to have long-term deployment across the deposit to be able to make a proper conversion. We will do it next year.
Speaker Change: For more references, see the topic in the description.
Speaker Change: I'll see you next time.
Speaker Change: I was just going to repeat the question about the level of the economy. Obviously, in this range of 3 to 4 grams, we thought it was the right zone for a positive economy. But clearly, based on the levels we were getting, it seems to be trending towards something better than that, but we just haven't finished the work.
Speaker Change: I can't wait for the announcement. Thank you, guys.
Speaker Change: Your next question comes from a line of Carrie McCrory from Canaccord Genuity. Your line is open.
Carrie McCrory: Hello everyone. Maybe a question for Claude about balance. Can you talk a little about the optimization initiative you are referring to?
Speaker Change: Good morning. Obviously, as we restarted this project, it'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.
Carrie McCrory: As you may have noticed in the last quarters, we have put a lot of effort into this.
Carrie McCrory: And at the same time, we are mixing the ore and keeping our focus on achieving the year's goal, as we have indicated, and we continue to obtain the production of 250,000 tons.
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Speaker Change: Are there any issues on the side of the circuit's stick, or creaking, or color, with what you are trying to optimize?
Carrie McCrory: Subtitles created by the Amara.org community
Speaker Change: As I said, it's quite an old moment. It lasted eight years. It's at high altitude, with different levels of humidity. So, as we go through it, we were able to identify solutions.
Carrie McCrory: structural parts. We are working slowly through these.
Carrie McCrory: across the border and Molde. We had initial challenges with the disconnection, but we resolved these.
Carrie McCrory: Valine is not a problem and we are now focusing on filtration. When I think about it, Curious, we are really moving small bottles.
Carrie McCrory: We addressed the efficiency of an area and optimized it. Then, we will go down the line and look at the next place where we could...
Carrie McCrory: It's as I thought.
Speaker Change: There might be a question about Bald Mountain. You have a lot of resources there, not a lot of reserves. You have this Giena project. I wonder if you can give us some insight into the objectives of this project.
Carrie McCrory: Subtitling by Société Radio-Canada
Speaker Change: I will start and the others can join in. As you know, as we have always said with Bald, we have a great resource, about 4 million ounces.
Carrie McCrory: And we also said that it's really a bit of a situation that is a bit more on the line, you know, everything internal has to compete for capital.
Carrie McCrory: and some of these opportunities have evolved, you really need to have confidence in a higher gold price.
Carrie McCrory: The other characteristic of Val-d'Eau, which is different from other mines, is that instead of having a large building where you make a big retreat, we have a large group of small buildings.
Carrie McCrory: In the context where we find ourselves with the rise in the price of gold, we will see a faster income.
Carrie McCrory: satellite system
Carrie McCrory: Subtitles created by the Amara.org community
Speaker Change: OK, thank you.
Speaker Change: Once again, if you wish to ask a question, press button 1 on your keyboard. Your next question comes from the line of Tania Jakuskinec from the Bank of Scotland. Your line is open.
Tania Jakuskinec: Good evening everyone. Thank you for accepting my questions and congratulations on a good quarantine. It's great. So, maybe we can move on to Jeff? Can you tell us exactly what we are expecting with this permit? And then, once we have this permit, assuming it's soon, what can be done over the winter? I'm just trying to see if there is a timeline for the start of the decline next year. Thank you.
Speaker Change: Thank you for the question. I might divide it with Will to go into the activities we will do in the winter.
Carrie McCrory: But regarding the strike permit, you are specifically asking about the AAX, so I will not go into the federal IAC process.
Carrie McCrory: But regarding the AEAX plan, there are a number of permits to wait for, and we are expecting them very soon.
Speaker Change: You should have learned from our press release that the most important first permit we need, for all construction activities, is the closure plan.
Speaker Change: We are pleased to receive the invitation from the Ontario Economic Agency for the eligibility of a financial assurance certificate. We hope to obtain this certificate very soon. It is the first key permit.
Speaker Change: Other permits include the fact that we are waiting for a permit to take water from the Ministry of Energy, Conservation and Parks.
Speaker Change: We also expect this in the long term.
Carrie McCrory: We are also waiting for a tree removal permit from the Ministry of Finance and Resources and Forestry. This permit should come immediately after the provision of our closure plan.
Carrie McCrory: And then, if we look more towards the year 2025 and more towards the activities of the AX, we also have...
Carrie McCrory: and we are waiting to obtain additional permits from the Ministry of the Environment, Conservation and Parks.
Carrie McCrory: regarding certain species. But, once again, it's not a question of if on these permits, but of when, and to expect all of these in relatively short order. And I would say that...
Carrie McCrory: The last point I would like to make is that with respect to the AAX, and while we are waiting for that, they do not impose the main horizon of the project.
Carrie McCrory: Activities.
Carrie McCrory: Regarding activities in general, I might hand over to Will to talk about what we are going to do in the winter program. Of course. We can do the majority of our activities in winter. Obviously, to reach the shelter at AEX, the main scope of activities is to construct a portal panel and a wooden cover. We can therefore do the excavation and replacement of this facility during the winter, and we can also work on some of the auxiliary filling facilities that we are going to set up, like the ventilation panel, etc.
Carrie McCrory: Most of the work can be progressed during the winter. We will also continue to do geotechnical work for a larger project. We will continue to do offshore farming and, as we mentioned, exploratory farming. Winter does not slow us down in this regard.
Carrie McCrory: Subtitles created by the Amara.org community
Speaker Change: OK, it's good for the hair. It's just cold on top of that.
Speaker Change: Thank you.
Speaker Change: Maybe by moving to the cost side, I don't know who wants to take this question, but I just want to get a perspective, and thank you Andrea for the CAPEX for the year 2025. Just on the cost side, is it safe to assume that you have 5% less production for next year, so that will affect your costs, and then we have the higher roll price which, obviously, also affects your costs?
Carrie McCrory: at the back of the page of loyalties.
Carrie McCrory: And then, we have inflation.
Carrie McCrory: Maybe we can understand what the current inflation is that you see in your work. Are you in this 5% for your employees and contractors? I will try to understand what my costs should look like next year during 2024.
Speaker Change: Yes, Tanya, I think I will start by saying again that we are still in our budgeting process, but I can certainly make a few observations. So, you are right about the factors you mentioned that will affect costs next year. So, another area I would like to note, and then I will return to the question of inflation, is just the production mix.
Carrie McCrory: So, with Cassius being in a year of production more based on the mine plan sequence, being our lowest asset, this will have an impact on costs in general.
Carrie McCrory: And in terms of labor inflation in particular, yes, I would say it's about a 5 or 6% increase, that's what we expect just for labor costs, that would be labor and contractors together.
Carrie McCrory: except for labor costs.
Carrie McCrory: inflation would be lower than that, so averaging somewhere around 3% or so for total inflation, on average.
Carrie McCrory: Subtitling by Société Radio-Canada
Speaker Change: OK, and so if I were...
Speaker Change: or Antoinette.
Speaker Change: at the higher place from 5 to 2%, that's what we think, but we will discuss it in more detail in February.
Speaker Change: Yes, I mean, again, it will be a combination of a few factors. There is obviously the numerator and the denominator. We are going to be a little down.
Speaker Change: while she shows the seizure that speaks.
Carrie McCrory: And there is inflation, and then there is the grade effect, from where comes the production next year against the previous year.
Carrie McCrory: And we had to leave all that through the hop-up...
Carrie McCrory: This suggests that costs will increase a little, but we have not finished the work.
Speaker Change: And maybe, Paul, to continue on that, I would just like...
Speaker Change: and you talk about your reserves and the elimination of grades. Obviously, that's another impact, isn't it?
Speaker Change: I just wanted to try to get your understanding on what you think about the prices next year and the shutdown fees as well.
Speaker Change: Subtitles created by the Amara.org community
Speaker Change: For those who haven't heard it, I thank you for your presence today.
Speaker Change: Once again, we are making an effort. It is something that we will generally ease after the end of the budgetary process. I would say, first, on the decision grades,
Speaker Change: This is a question we receive a lot in the gold price environment. We certainly have not planned to do anything with our cut-off grades. Our mills are full. We will simply continue to stockpile the low-grade materials. No changes to the cut-off grades.
Speaker Change: Regarding the assumption of commodity prices, I have the expectation that...
Speaker Change: that in the industry, you will see a movement towards above last year's reserve and resource prices. We are still thinking about that. We are not actually...
Speaker Change: I don't think there has been that much impact, but I think it's a move towards the reality we live in.
Speaker Change: There will probably be higher reserve and resource prices in the future.
Speaker Change: Subtitles created by the Amara.org community
Speaker Change: I look forward to learning more next year. Thank you very much for asking me the question.
Speaker Change: Subtitled by the Amara.org community
Speaker Change: Thank you.
Speaker Change: And that concludes our question and answer session. I will now hand over to Paul for some concluding remarks.
Paul Rawlinson: Thank you, operator, and thank you all for joining us this morning.
Paul Rawlinson: I hope to see you all in person in the coming weeks. Thank you for your attention.
Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.