Q4 2024 Kinross Gold Corp Earnings Call
Thank you for standing by. My name is Prilla and I will be your conference operator today. At this time, I would like to welcome everyone to the KINVAS Gold 4th Quarter 2024 Results Conference Call and Webcast. All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the conference over to David Shaver, Senior Vice President of Kinrose Gold. Please go ahead.
Speaker Change: Thank you and good morning. With us today we have Paul Rawlinson, CEO, and from the Ken Ross Senior Leadership Team, Andrea Freeborough, Claude Schimper, Will Dunford, and Jeff Gold.
Paul Rawlinson: Page 3 of this presentation, our news release dated February 12, 2025, the MD&A for the period ended December 31, 2024, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.
Thanks, David, and thank you all for joining us.
this morning.
Paul Rawlinson: I will provide an overview of our fourth quarter and full year results.
Paul Rawlinson: Highlight our operations, projects, and provide an outlook for the business going forward.
and make a few comments on our achievements in sustainability.
Paul Rawlinson: I will then hand the call over to Andrea, Claude, and Will.
to provide more detail.
Speaker Change: With respect to Q4, we delivered a strong quarter producing just over 500,000 ounces.
Speaker Change: With respect to the full year, once again, we achieved our market commitments delivering over 2.1 million ounces.
Speaker Change: We also delivered on our full year cost of sales and all in sustaining cost guidance, which demonstrates our strong focus on rigorous cost discipline.
As a result,
Speaker Change: We generated record free cash flow of more than 1.3 billion dollars.
which more than doubled against the prior year.
Speaker Change: This record cash flow generation also benefited from strong operating margin expansion.
which outpaced the relative increase in the gold price.
compared to a 23% increase in the realized gold price.
maximizing the benefit of the gold price for our company.
Speaker Change: With respect to our operations, our two largest assets, Tassius and Perikatu, were both standouts.
together accounting for approximately 1.2 million ounces
for more than half of our production.
Cassius had an exceptional year.
delivering record annual throughput, production, and cash flow.
Speaker Change: And once again, it was our highest margin operation in the portfolio.
Perricoutier delivered a four-year production exceeding the midpoint of guidance.
and exceeding 500,000 ounces for the seventh consecutive year.
and LaKoipa
We delivered on four-year production guidance.
as work continues on long-term optimization of the mill.
Speaker Change: At our U.S. operations, we had another solid year with production and costs on plan.
Turning now to updates on our projects.
Speaker Change: In 2024, we continue to make excellent progress across our pipeline.
Speaker Change: In particular, we reached an important milestone at Great Bear with the release of the PEA in September.
Speaker Change: With the PEA, we have confirmed the top tier potential of this asset with estimated average annual production
of approximately 500,000 ounces.
at an impressive, all-in sustaining cost.
of approximately $800 per ounce.
Speaker Change: For the Great Bear Advanced Exploration Program, we have received all the necessary permits for our current activities.
Speaker Change: and we expect to receive the two remaining permits when they are required later in the year.
Speaker Change: The Yearly Works activities, including tree clearing and earthworks, commence prior to year-end.
Speaker Change: and construction of the Exploration D-Plane is planned to commence later this year.
Regarding permitting for the main project
Speaker Change: We continue to work with the Impact Assessment Agency of Canada.
Speaker Change: and we plan to file the impact statement later this year.
at Round Mountain.
Underground development at Phase X is progressing well.
and 21 kilometers of drilling completed last year.
As outlined in our news release,
Speaker Change: We are continuing to see strong exploration results from Phase X.
reaffirming our vision for a high-productivity, low-cost underground mining operation.
Speaker Change: This conversion marks an important first step in extending the mind-life of BALD.
Speaker Change: where we now see a strong case to proceed with initial mining at the Red Bird Pit.
We are proceeding with a disciplined approach.
Speaker Change: expecting that Redbird could ultimately extend production from Bald through 2031.
Will is going to discuss more on this opportunity later.
Speaker Change: We also continue to advance work on Curlew and Washington State.
and Loma Marte in Chile.
Speaker Change: Before moving to our outlook, I'd like to comment on our year-end reserve and resource pricing update.
Given the stronger prevailing gold price environment,
Speaker Change: We have revised our gold price assumptions, which aligns with industry peers.
Speaker Change: Our reserves are now determined on a $1,600 per ounce gold price.
and our resources on a $2,000 per ounce gold price.
Although our price assumptions have moved higher,
Speaker Change: We are not planning to reduce the cutoff grades to our mills.
as our focus remains on maintaining strong margins.
Speaker Change: Moving to our outlook, we are reaffirming our stable multi-year production profiles.
Speaker Change: Production of 2 million ounces for 2025 remains consistent with our previous guidance.
As previously guided.
Based on Mind-Plan Sequencing
Production from Tassius will be lower this year.
Speaker Change: Empirica II remains on track to deliver higher production this year.
Speaker Change: Looking to 2026, our production outlook of 2 million ounces remains consistent with previous guidance.
Speaker Change: We are introducing a new year of production of 2 million ounces for 2027.
Speaker Change: Beyond 2027, we expect production to remain around 2 million ounces through the end of the decade.
Speaker Change: Maintaining production at this level will be based on future production from our pipeline of project opportunities.
which include
Redbird Extensions at Bald
Open Pit Extensions at La Coypa.
BASACs Underground at Round.
Curlew in Washington State
and Grape Bear to round out the decade.
We will continue to advance these initiatives.
Speaker Change: And we plan to update you on our progress as we move forward.
With respect to capital allocation,
Speaker Change: and we have now fully repaid our $1 billion term loan.
Speaker Change: Our quarterly dividend remains in place as our baseline return of capital.
in the current gold price environment.
Our business is generating significant cash flow.
And if this current gold price holds,
Speaker Change: We are planning to return additional capital to shareholders later this year in the form of a share buyback.
Andrea will speak more on this shortly.
Speaker Change: I'd like to comment on some of our achievements in sustainability.
Speaker Change: In 2024, we once again demonstrated a strong commitment to sustainability by operating responsibly.
and advancing our strategy across this important area.
In May, we will publish our 2024 Sustainability Report.
Speaker Change: which will provide a detailed review on our sustainability performance and initiatives throughout the year.
Some highlights from this past year include
Completing more than 15 energy efficiency projects across the portfolio.
Speaker Change: placing us on track to achieve a 30% reduction in emissions intensity by 2030.
Speaker Change: We provided flood relief aid to communities in Brazil and Mauritania.
Speaker Change: We received a Sustainability Award from the Canadian Council for the Americas.
Speaker Change: and we were the top scoring gold company and top 10% overall in the Globe and Mail's Annual Corporate Governance Survey.
Lastly,
Speaker Change: I'd like to take a moment to thank Catherine McLeod-Seltzer for her significant contributions to Ken Ross and the board over her 20-year directorship with Ken Ross.
Speaker Change: Catherine has been an independent board member since 2005 and chair of the board since 2019.
Speaker Change: Catherine will be retiring from her role at our AGM in May.
Speaker Change: and we are pleased to announce Kelly Osborne will take on Catherine's previous role of Independent Chair.
Andrea: With that, I will now turn the call over to Andrea.
Andrea: Thanks, Paul. This morning I will review our financial highlights from the quarter and full year, provide an overview of our balance sheet and our capital allocation plans, and discuss our guidance and outlook.
Andrea: As Paul noted, we delivered production in line with guidance in 2024. Full year attributable production was 2.13 million ounces, with production of 501,000 ounces in the fourth quarter.
Andrea: Q4 sales of 518,000 ounces were slightly above production due to timing.
Andrea: Cost of sales of $1,096 per ounce and all unsustaining costs of $1,510 per ounce in the fourth quarter were higher compared to the prior quarter, as expected, mainly due to lower planned production from Tassius and Pericotew.
Andrea: Full year cost of sales of $1,021 per ounce and full year all-in sustaining costs of $1,388 per ounce were also in line with guidance.
Andrea: Margins were strong at $1,567 per ounce sold in Q4 and $1,372 per ounce for the full year.
Andrea: Our adjusted earnings were $0.20 per share in Q4 and $0.68 per share for the full year.
Andrea: Adjusted operating cash flow with $614 million in Q4 and approximately $2.1 billion for the full year.
Andrea: Attributable CapEx was $279 million in Q4 and $1.05 billion for the full year in line with full year guidance.
Andrea: Attributable free cash flow was a record $434 million in Q4 and was also a record $1.34 billion for the full year.
Andrea: Turning to the balance sheet, we ended the year with $612 million in cash and approximately $2.3 billion of total liquidity.
Andrea: We repaid an impressive $800 million against our term loan in 2024, and after making a subsequent repayment of $200 million, our $1 billion term loan has now been fully repaid.
Andrea: We have now fully paid for the acquisition of Great Bear on just the third anniversary, with fewer shares outstanding than prior to the transaction.
Andrea: Over the last 24 months, we have reduced our net debt by approximately $1.4 billion and our net debt to EBITDA from 1.7 times to 0.3 times as of year-end.
Andrea: Our business is generating strong cash flow in the current gold price environment and with the term loan now fully repaid, we are well positioned to consider additional return of capital for our shareholders.
Andrea: We are in the process of renewing our NCIB and based on recent gold prices we expect to initiate a share buyback program later this year.
Andrea: As typical for us, we expect Q1 to be a cash outflow quarter, in addition to the $200 million term loan repayment that we made in February.
Andrea: We also have our annual income tax payments in Brazil and now Mauritania, and our semi-annual interest payments.
Andrea: As such, we'll provide an update on our Return to Capital plans with our Q1 results in May.
Paul Rawlinson: Turning to our guidance and outlook, as Paul noted, we're forecasting production in the range of 2 million ounces for 2025, remaining consistent with previous guidance.
Paul Rawlinson: For costs, we're guiding $1,120 per ounce for cost of sales and $1,500 per ounce for ASIC.
Paul Rawlinson: Cost of sales and ASIC are both up approximately 10% compared with 2024.
Paul Rawlinson: The expected increase is driven by three factors which mainly include structural changes to our portfolio this year. First, production guidance of 2 million ounces relative to 2.1 million ounces last year, resulting in a denominator impact on our fixed costs and on sustaining capital in the case of all-in sustaining costs.
Paul Rawlinson: Second, with a lower planned contribution from taxpayers this year, we will see a smaller benefit from our lowest cost mine.
Last, modest overall cost inflation of 3-4%.
Paul Rawlinson: Our capital expenditure guidance of $1.15 billion for 2025 reflects annual inflation and planned higher capital spend as we continue to advance Great Bear.
Paul Rawlinson: Approximately $615 million of our total CapEx is expected to be non-sustaining.
Paul Rawlinson: Looking ahead to 2026, our production guidance of 2 million ounces remains unchanged from our guidance update last year.
Paul Rawlinson: Beyond 2026, we have introduced another year of production guidance of 2 million ounces for 2027, in line with 2025 and 2026.
Paul Rawlinson: Subject to ongoing inflation, a tributable CapEx is expected to be consistent in 2026 and 2027 in order to continue to bring projects within our pipeline into production.
Claude: I'll now turn the call over to Claude to discuss our operation.
Thank you, Andrea.
Claude: In the fourth quarter, we officially launched our health and safety brand called SafeGround.
Claude: and commence work on establishing safe ground leadership development programs that will be tailored and delivered to four specific groups. Executives, Managers, Frontline Supervisors and Operators.
Claude: In 2024, our operations delivered on our full year of production and cost guidance.
Production of 501,000 ounces in the fourth quarter as planned.
Starting with Tassius.
The mine delivered record throughput, production, and cash flow.
Claude: Record full year production of 622,000 ounces at an impressive cost of sales of $681 pounds drove record free cash flow from our lowest cost operation.
Claude: In the fourth quarter, Daz has delivered production of 139,000 ounces at a cost of sales of $725 an ounce.
Claude: Production was lower over the prior quarter due to a planned reduction in grade.
Claude: Production at Tassius is expected to be lower in 2025 as mining continues transitioning into lower grades.
Claude: Tezos is expected to deliver 500,000 ounces with a target cost of sales of $860 per ounce and is expected to be our lowest cost operation once again this year.
Claude: Paraka 2 delivered another strong year with production of 529,000 ounces exceeding the midpoint of guidance.
Claude: and the cost of sales of $1,039 pounds, which was below the midpoint of guidance.
Claude: As planned, MIME sequencing continued to transition into higher grades in the fourth quarter.
Claude: The production of 124,000 ounces was lower over the prior quarter as stronger grades were offset by lower throughput resulting from the timing of some mill maintenance and mine sequencing.
Claude: Production at Barracuda is expected to be higher and cost lower this year as mining continues in the higher grade portion of the pit.
Claude: Traktor 2 is expected to produce 585,000 ounces at a cost of sales of $1,025 per ounce in 2025.
Claude: At La Coipa, fourth quarter production of approximately 59,000 ounces improved over the prior quarter on stronger mill throughput, which offset lower grades.
Four-year production of 246,000 ounces was in line with guidance.
Claude: The site team continues to manage throughput while long-term mill optimization initiatives are being implemented.
Claude: and LaCroix has anticipated to produce 230,000 ounces at a cost of sales of $1,060 per ounce in 2025.
Claude: Moving to our U.S. operations, production was stronger in the second half of the year as expected, following the start of production for Manchur early in the third quarter.
Claude: Collectively, the U.S. sites delivered full year production of 731,000 ounces at a cost of sales of $1,313 pounds, which was in line with guidance.
Claude: Production of 179,000 ounces in the final quarter was on plan.
Claude: In Alaska, fourth quarter production of 92,000 ounces was lower compared to the prior quarter.
Claude: and cost of sales of one thousand three hundred and twenty dollars pounds was higher due to the timing of the processing of the Manchur Hall.
Claude: and production was in line over the prior quarter while costs were slightly lower due to the timing of sales.
Claude: At Round Mountain, production of 43,000 ounces was in line compared to the prior quarter.
Claude: Mining at the Phase S open pit remains on schedule, with initial production expected to begin in the second half of the year.
Claude: With that, I'll now pass the call over to William to discuss our projects.
William: Thanks, Claude. We've just released our annual reserve and resource, so I'd like to start out by providing that update, and then I'll discuss the growth projects that sit in our resource and underpin our potential future production profile.
William: We are currently in a phase where we are focused on drilling and developing our earlier stage higher grade growth projects like Great Bear, Phase X, Lobo Marte, and Curlew.
William: As a result, the majority of our additions this year came in the Inferred category, where we saw a 1.7 million ounce increase.
William: We did also see some additions in the M&I category, which were largely offset by conversion of 1,000,000 ounces out of M&I into reserve at Bold Mountain.
William: We have updated our reserve and resource gold price assumptions from $1,400 to $1,600 and from $1,700 to $2,000 respectively.
William: The intention of this was to be more reflective of the current gold price environment.
William: With the increase in our gold price, we are taking a balanced approach and our objective was not to drop cut-off grades to grow resources.
William: Instead, we are focused on margin and quality of our resource additions to extend our mine lives and bring on higher-grade growth projects, as you can see by the overall increase in resource grade.
William: To that end, you can see on this slide an overview of the significant resource optionality for both mine life extensions at our existing mines and new production from growth projects.
William: with 26 million ounces in M&I and another 13 million ounces in inferred.
William: These resources form the pipeline of potential opportunities that we are progressing to support our production profile through the end of the decade and into the 2030s.
William: This slide gives an indication of the level of study of these opportunities.
William: We have our base case, which includes reserves and already approved projects, and provides the production in our guidance window through 2027.
William: Second, we have several growth projects at an advanced stage of study that offer potential to add production both through the end of the decade and beyond into the 30s.
William: And third, we have several opportunities within our project pipeline that are at an earlier stage of study and offer potential to contribute to our 2030s production profile.
William: We remain excited about our internal prospects, which are further augmented by today's strong gold price, and we will continue to maintain a disciplined approach to progressing these projects into our production profile, with a focus on margin and return.
William: Gold Mountain offers a recent example of bringing these pipeline opportunities into our production profile.
William: In mid-2024, we received our permits for the Juniper package, and on the back of this, we have converted approximately 1 million ounces of resource to reserve in the Redbird Pit.
William: We have split Redbird into two phases. We have approved and already started mining phase one, which contains 270,000 ounces, and will take production into 2028.
William: Phase 2, containing approximately 690,000 ounces of M&I, could begin in 2026 and extend production from Bald Mountain through 2031.
William: This phased approach lowers the initial CapEx and risk, and pulls forward earlier production from Phase 1 into 2027 while we continue to optimize our design and execution plan for Phase 2.
William: The initial CapEx of $120 million for Phase I is primarily pre-stripping costs, as Phase I leverages the existing leach pad capacity.
thereby minimizing our initial capital risk.
William: This project has an all-in sustaining cost of $1,500 per ounce and a strong return at today's gold price.
William: We also continue to focus on additional optionality at Bald Mountain outside of Redbird, including looking at small satellite pit opportunities that could be combined with Redbird 2.
William: At Tazius, we have completed a new mine plan on the back of the 2024 reserve update.
William: Cassius production over the next three years is expected to be lower, driven by mine plant sequencing and lower milt grades as we focus on stripping in West Branch 5.
William: It has been a focus for the TASIUS team to increase production in the 2025-2027 window through operational improvements, design optimizations, and unlocking satellite opportunities.
William: This work has added approximately 100,000 ounces over this three-year period as compared to the mine plan update we provided in 2023.
William: Optimization at Taziest is ongoing, with additional satellite opportunities being evaluated.
William: Studies to explore underground potential are also progressing, with recent drilling at West Branch intersecting wide mineralization 700 meters down plunge of the existing resource.
Moving from our operations to our growth projects.
William: The CURLU team has been successful in adding high-quality resources over the last couple years, further enhancing the potential of the project.
William: As part of our year-end resource update, we are pleased to report a high-grade resource addition at Curliw.
William: This is the addition of 125,000 ounces at 9 grams per ton in the stealth zone, which continues to be open both long strike and death.
William: Not only are we seeing strong grades in this zone, but it's also coming in at a very minable width, averaging just over five meters.
William: This focus on high-grade extensions and stealth will continue in 2025 with an expanded drill program to target further extensions at depth.
William: Now shifting focus to Phase X, where development and drilling continues to progress well, we have now expanded drilling into the upper zone of the exploration target, and you can see the results continue to support our thesis of a bulk underground operation in the range of 3 to 4 grams per tonne, providing potential for higher margin supplemental production at Rail Mountain.
William: In 2025, we will be completing our initial infill drilling program at Phase X, and we anticipate the release of an initial underground resource with our 25-year-end resource update.
William: At Gray Bear, early works construction for advanced exploration commenced in November.
William: As can be seen on the slide, tree clearing is now complete, and earthworks for excavation for the exploration infrastructure has commenced.
William: We are excited to have broken ground and are focused on progressing civil works and permitting over the coming quarters to allow us to start the exploration decline later this year.
William: Moving to the broader exploration update, our team had another strong campaign in 2024, with approximately 320 kilometers of drilling completed across MINACs, brownfields and greenfields.
William: As detailed in our press release, this program produced notable results across several locations.
William: We provided an update on Great Bear back in September, highlighting the successful addition of over 500,000 ounces of high-grade inferred resource at depth, and the strong results of our PEA.
William: We also highlighted the drilling in depth below the PEA inventory and resource that demonstrates the significant upside potential for further resource additions.
William: Following the success of this 2024 drilling and the results of the PEA, we have shifted our focus at Great Barriers to regional exploration work on the 120 square kilometre land package.
William: We have already provided updates on Curlew and Phase X, so I will move on to our other U.S. assets.
William: At Fort Knox, the program focused on two main areas, growth around the Fort Knox Pit and around the Gills Saddle.
William: We saw some good intercepts across both areas, indicating potential for additional mill feed, and this work will be followed up on in 2025.
William: At Bold Mountain, with near-term mine extensions established through the approval of Redbird 1, the 2025 exploration campaign will focus on conversion of the inferred resource in Redbird 2 and on generative projects.
William: At TASIIST, we added 110,000 ounces to reserves in 2024 through the addition of the Fenex Satellite Pit.
William: Exploration in 2025 will focus on further expanding mineralization at the underground target and drilling out additional satellite pit opportunities on the wider land package.
William: Moving to Chile, our brownfields program further delineated porphyry mineralization, and in 2025 we will follow up on these results and also progress exploration of known trends on the La Coypa license.
William: In Brazil, our brownfields program focused on testing targets along the Northwest Corridor from Perico II, with results showing similar style and grade of mineralization to the Perico II deposit.
William: Moving to our Greenfields program, approximately 45 kilometers of drilling was completed on targets located in Canada, the U.S. and Finland.
William: In Manitoba, our drilling at Laguna continued to define high-grade, shear-hosted vein systems, and in 2025 we will focus on increasing the critical mass of mineralization to support further work.
William: This drilling included an initial diamond drill hole at the PWCJV project in September, which successfully intersected lower plate carbonates associated with the Cortez District at depth.
William: In Finland, we progressed both base of till drilling for target delineation and follow-up diamond drilling, which showed some high-grade intercepts at Lon East.
William: In Finland, we will follow up on these successes in 2025 and continue our exploration of this underexplored greenstone belt.
William: Overall, we are encouraged with our success identifying and progressing earlier stage opportunities such as Phase X, Curlew, and Great Bear.
Paul Rawlinson: I will now turn it back to Paul for closing remarks.
Thanks, Will.
Speaker Change: After delivering on our commitments in 2024, we are well positioned for a successful 2025.
Speaker Change: Our business is in great shape, both operationally and financially, with a number of key milestones for the year ahead, including
Repayment of our term loan.
Pre-stripping at Redbird.
Speaker Change: Advancing permitting across Great Bear, Curlew, La Coipa, and Lobo Marte.
Advancing Exploration Decline Infrastructure at Great Bear
Restating our share buyback plan.
Initial production from Phase S.
Satellite Mining at FNAT.
and an anticipated year-end resource at Phase X.
In summary,
We are excited about our future.
We have a strong production profile.
You are generating significant free cash flow.
We have an excellent balance sheet.
Speaker Change: We have an exciting pipeline of both exploration and development opportunities.
Speaker Change: We are very proud of our commitment to responsible mining that continues to make us a leader in sustainability.
Speaker Change: With that, operator, I'd like to open up the line for questions.
Speaker Change: All right, thank you. And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: If you would like to withdraw your question, please press star 1 again. Once again, please press star 1 to ask a question. Your first question comes from the line of Mike Parkin with National Bank. Please go ahead.
Hi guys, thanks for taking my question.
Speaker Change: Hi, good morning Mike, it's Claude. Yeah, we did a shutdown for about four to five days. We did some relining stuff and changing some belts and things.
We're right on the line.
Speaker Change: And from a production point of view, because we entered into the lower grade section,
which is in anticipation of this year going forward.
We still maintain that 3-quart average for the core.
Speaker Change: Well, yeah, that's what I was kind of getting at, is like, would I adjust for that?
Speaker Change: On 87 operating days, you're over 25,000 tons per day. So that's like the second consecutive quarter you're.
You're not quite 10% above nameplate, but consistently kind of
hitting above the target.
Speaker Change: Do you see that kind of continuing going forward, and what was the baseline assumption in terms of throughput for guidance?
Speaker Change: Now, Mike, all of that is as planned. In order to do an average of 24,000 a day, you need to do someday the 26,000, 27,000.
So we're well within the nameplate.
It's really just about
Speaker Change: Our ability to use our CI initiatives and all of these things to have more and longer extended runs
Speaker Change: at a higher rate, so we had a tremendous quarter in terms of throughput.
Speaker Change: And as I said, we moved into lower grade, that's why the production was slightly down.
Speaker Change: But we're well set up and we've started the year very strongly as well now.
Speaker Change: given that we've taken the opportunity to maintain when we could.
Speaker Change: Okay, and in terms of the limiting factor there's, are you more mill constrained or pit constrained in terms of getting ore either out of the pit or through the mill?
Speaker Change: I think the ultimate constraint is the plant because we've got some stockpiles and as we manage through from phase 4 at the bottom of the pit now going into the phase 5 stripping we will balance.
production through stockpiles and mine performance. Ultimately we've designed this
Speaker Change: plan to run an average of 24,000. There'll be times that we average slightly above that and other times slightly below, but we're just come along strong.
Speaker Change: After some tough years and we're pushing the boundaries and the limits and we constantly learn more about the plant and how certain things behave.
Speaker Change: And it will be a balance of making sure we maintain our recovery levels.
Speaker Change: So don't push the tons too hard to then start losing on recovery.
Okay.
at Round Mountain.
You know, you keep hitting these really high-grade structures.
Speaker Change: How is that being kind of captured in the reported reserves and resources with respect to where is your capping grade set at?
Speaker Change: just kind of we don't have understand what you're reporting versus like what you're kind of realizing that's a drill bit
Speaker Change: Yeah, we don't have an underground reserve or resource at FAZE Act at Round Mountain yet. The resources on the books and reserves are all open pit.
Speaker Change: We're hoping after this infill drilling that we're doing now, that's the reason we're doing it, is to get an initial underground resource out at the end of year this year with our annual update.
I think the general question is in the high grades.
Speaker Change: Okay, yeah, I think I remember you guys guided the market to kind of three to four grams.
Shape Up Is That
Speaker Change: Is the feeling that's maybe a bit conservative given the consistent you know really good drill results you're putting out in the market from that?
Speaker Change: We don't want to, you know, get ahead of ourselves and that is why we're doing the infill drilling and you can see on slide 25 and what we released that we've got a pretty extensive table.
Speaker Change: We want to get the bigger resource and we want to get the bulkier deposit so you can see a more representative idea of the grade in those wider intervals. And we do still see it being in that three to four gram per ton range.
Speaker Change: That's ultimately how we're going to maximize the economics on this, is by going to bulk mining with these pretty exceptional wide zones.
Okay. Well, looking forward to the update.
Speaker Change: And your next question comes from the line of Anita Suny with CIBC. Please go ahead.
Anita Suny: Hi, good morning, Paul and team and congratulations to the whole team on a very successful year on many fronts.
Speaker Change: And I agree with Mike on that slides 20 and 21, it's good to see those slides again, especially from companies with a track record of actually executing on what they say they will do. A question on the Redbird edition.
Speaker Change: Yeah, look, we're still working on Phase 2, that's why we've approved Phase 1. The main benefit of, well, one of the many benefits of phasing this is that the Phase 1 cash flow that comes from those early ounces
Speaker Change: It's intended to pay the majority of the CapEx for Phase 2 to keep that site, you know, relatively cash flow neutral as it strips Phase 2. So we don't have an exact sense of the CapEx yet and we need to complete our work.
Speaker Change: But that's the idea, is to try and keep our current gold prices above zero as we strip phase two.
and Chris Lichtenheldt.
Speaker Change: And then just a question for the finance team and Paul, just wondering when it comes to the share buybacks that you were talking about in the second half of the year, is it just basically kind of getting through the cash outflows that you're expecting Q1 and then equal prices stay where they are, you can start executing on that in Q2 or is it more back half of the year?
Paul Rawlinson: No, I think that's exactly as you described it, Anita. Again, from my perspective, we have been consistent with our capital allocation philosophy.
Paul Rawlinson: As we say all the time, it's needs of the business, needs of the balance sheet, return of capital to shareholders.
Paul Rawlinson: We did, of course, repay the debt. That was our priority in 24. But as Andrea said,
Andrea: All the cash we've built up here while we've been paying down debt, we're about to pay a bunch of that out as we do seasonally in Q1. So we want to get through that, kind of get our cash back up
Andrea: Hopefully we're still in the same kind of gold price environment and we think that is the right time to be thinking about turning back on the buyback.
Speaker Change: Okay another question just on a big picture I guess a great bear and and I'm just wondering if you've seen any on the permitting front have you seen any change in the
Speaker Change: the government standpoint in terms of how motivated they are to get these permits to you?
Speaker Change: Yeah, look, I mean, I think it's a safe assumption that when.
Speaker Change: When there's an election, things kind of slow down in terms of the bureaucrats. But I'll get Jeff to kind of expand on it. He's on the front line of that one. Thanks, Paul. Yeah, no, Paul's right as a practical matter.
Speaker Change: There is a little bit of a slowdown, but we've spent a lot of time, both provincially and federally, connecting with the regulators and building relationships there.
Speaker Change: And as a result, those permits will continue to advance, and we're still expecting to get the remaining permits that we require without delay.
Speaker Change: Lastly, I just wanted to ask on Fort Knox Man Show,
Speaker Change: In the tonnage that's coming through, I understand some of it has to do with the weight restrictions and
Speaker Change: I just wanted to get an idea of what the standard kind of tonnage that we would expect out of Manchil would be, and those are pretty good grades this past quarter as well, so I just wanted to comment on that.
Paul Rawlinson: Yeah, Anita, you're correct. As we go through seasonal things in the North...
We end up with different load restrictions.
We also have one load restriction that...
Paul Rawlinson: came after the feasibility study that we've had to adjust for, and given we balanced a number of trips.
Paul Rawlinson: on a daily basis, but we expect to do an average of 200,000 to 220,000 batches when we do Mantra.
Paul Rawlinson: because, as you can appreciate, we switch from very low-grade Fort Knox.
Paul Rawlinson: The High Grade Mancho, and then back to Fort Knox Surf. Our average is about $220,000 per batch.
And we expect to maintain
Sort of one and a quarter top cadence.
Speaker Change: Sorry, so 220,000 K tons per quarter, and you batch out the shipment? Okay, all right.
Paul Rawlinson: Okay, thank you very much. That's all. That's it for my questions.
Speaker Change: And your next question comes from the line of Josh Wolfson with RBC Capital Markets. Please go ahead.
Josh Wolfson: Thanks very much. On the capital returns program, I understand the motivation to act maybe a bit conservatively, repay the debt, wait for some higher cash flow periods.
Josh Wolfson: I'm just wondering how the team is going to be evaluating.
Josh Wolfson: you know, the buyback in the context of how, you know, the share price has performed. It's been a, you know, phenomenal year to date, phenomenal year of a year. Is that going to influence, you know, the quantum of the buyback or is it going to be a, you know, more mechanical or formulaic process? Thanks.
Speaker Change: Yeah, I'll take that. Andrea, feel free to jump in. Good question. Look, I think it's all about the right balance. I mean, number one, we still see our shares as undervalued. We also
Josh Wolfson: We'll think about that in the context of SPOT. So, you know, you can look at our valuation share price and, you know, in the sense of consensus.
Josh Wolfson: with a consensus gold price. You can also look at it in the context of spot, and in both cases we believe we're undervalued. Having said that, it's not lost on me or us that, you know, here we are, record gold prices.
Josh Wolfson: really good share prices. Is this the time to be buying back your shares? We still think it is, but I think it requires balance and focus. And that's how we're coming at it. We'll be thinking about it in those terms. It won't be just a
necessarily an automatic formula.
Thanks. And then one other question on the tax.
Josh Wolfson: Should we be assuming going forward, I guess, full tax rates at both Taziest and La Coipa? The number seems to have gone up year over year, and I just want to make sure that it's maybe a combination of maybe capital being repaid as well as gold prices having increased. Thanks.
Speaker Change: Yeah, it is both, Josh. So, you know, starting with Mauritania, we've
Josh Wolfson: 2024 was the first year that we became income taxable in Mauritania, so
Josh Wolfson: If we look at the cash tax guidance, about $200 million of it is payments that we'll actually make in Q1 that are related to 2024. So yeah, that is both Mauritania...
coming in as well as higher gold price.
Josh Wolfson: impacting Brazil and Chile where we're also you know paying more significant taxes and then the rest of that guidance is just tax installments that we expect to pay throughout 2025.
Josh Wolfson: Should we be assuming the full corporate tax rate is 25% or is it still a low tax year versus steady state?
No, it's full normal tax year.
Thank you.
And your next question comes from the line...
Sorry, go ahead.
Speaker Change: We can advance to the next question. Thank you. And your next question comes from the line of Kerry McCrory with Canaccord Genuity. Please go ahead.
Kerry McCrory: Hi, good morning, everyone. Just maybe back on capital allocation. I know there's more details to come there, but
Kerry McCrory: Just in terms of the cash balance, like are you guys thinking about building up a cash balance ahead of Great Bear? Is there a minimum cash balance that you want to maintain? And then I guess the second question is the term loans gone There's no debt due till 2027, you know, just broadly speaking in terms of debt Are you comfortable maintaining that debt? Are you kind of keeping that leverage going forward or would you even consider repaying debt down in the future?
Kerry McCrory: Sure. Thanks, Carrie. I'll start with the debt part. You're hitting it right on. We look forward to the 2027 notes of the next maturity, and we do plan, we would like to repay those notes. That's kind of back of our minds as we think about the cash balance. If we think about what we'll allocate to share buybacks, we're balancing, as we always do, needs of the business. That's the CapEx going forward for this year.
Kerry McCrory: here. And then with an eye to the balance sheet, again, in the back of our mind, that we want to make sure we can repay those 2027 notes.
Speaker Change: and then balancing that with additional return of capital. So that's sort of how we're thinking about it. You know, our cash balance was a bit higher at the end of the year, but as Paul noted, some of that...
Speaker Change: A lot of that gets paid out in Q1, with the $200 million we paid to finish repayments on the term loan, as well as the tax payments, and we've got some interest payments in Q1.
Speaker Change: We'd like to get back to where we started the year, and then we'll look to allocating some of the excess cash out in the form of buybacks.
Speaker Change: Okay, great. And then maybe just a mechanical question, but just in terms of the quarterly sequence of production, you did 500,000 ounces in the quarter, 2 million ounces as the guidance, should we be expecting relatively consistent production through the year or is there sort of seasonality that we should consider?
Speaker Change: It's relatively even, consistent as we look out to this year.
Speaker Change: And then maybe just one last one on La Coipa, you mentioned permitting and some laybacks, just wanted you to give us a bit of color on what that potentially leads to.
Speaker Change: Yeah, we've got, you know, our current way you see on the reserves takes us through 2027 in terms of the mine plan. And then the permitting that was discussed there in the press release is really just for further extensions of the open pits there. We've got additional oxide pits, very similar to what we've been doing. So kind of steady as she goes, but there is some permitting required as a part of that, to bring that in through the end of the decade.
Speaker Change: So potentially that'd take it out to like 20, 30 or so.
Speaker Change: Yeah, yeah, those, you know, it all depends on I guess, gold price, but those should be able to take us at least through 2030. We do have a, you know, meaningful inventory potential there, you can see it on our resource statement. So the potential it could go beyond that.
Bye.
Speaker Change: Great. And maybe one last quick one. You mentioned the TASIUS new mine plan. Should we should we be expecting a 43-101 report or no?
Speaker Change: Yeah, we'll most likely update that report with our AI this year.
Speaker Change: Thank you and your next question comes from the line of Lawson Winder with Bank of America. Please go ahead.
Thank you, Operator. Good morning, guys. Nice update.
Speaker Change: I wanted to ask about your commentary on exploration at La Koipa. I just get a sense in terms of your optimism around the ability to add to resources there. Is that something we can expect to potentially see as soon as 2025?
Speaker Change: Yeah, it's, I mean, our focus there really is, we already have the resources on the books to carry us.
through 2030, so we're not
Speaker Change: massively focused on expanding a lot beyond that at Lacroix, but there is a lot of, you know, a lot of good targets. It's pretty prolific ground out there. We've got a variety of historic pits in the area. So we had mentioned we will be doing some testing around some of those pits, looking for, you know, lower strip, higher margin kind of pushbacks in those pits.
Speaker Change: So, there's a lot of exploration potential, but as you saw this year, our real focus right now is drilling off these new growth projects that are coming in at a higher grade to support pulling those ultimately into our production profile and reserves, but we will do some exploration of the Koipa as well.
Speaker Change: And I'll just jump in on that. I mean, part of the
Speaker Change: Part of the consideration in that part of Chile where we're operating, Region 3 Atacama, is water.
Speaker Change: and we have existing permitted pumping water wells that support La Coipa but we we want to think about La Coipa's future and also Lobo Marque which we're advancing so
We're trying to find the right balance between, uh...
Speaker Change: Continuing to grow resources, looking to bring Lobo online towards the end of the decade, and working within our existing water permits.
Speaker Change: That's perfect. You addressed my follow-up question and then I would like to also just ask again about capital return and your thoughts on the dividend level, which is, I mean, I think abundantly sustainable at the current level and potentially sustainable at a higher level. Is that something you're also considering?
Yeah, look, I think just...
Speaker Change: We just want to be careful. We want to be balanced. There was a question earlier, does it make sense that the share price?
Speaker Change: We think it does, given our relative value. And so, as I said, needs of the business are well maintained. We keep a well-capitalized business.
which we believe reduces operating risk.
Speaker Change: We focused on paying down the term loan. We've just completed that. Cash out quarter.
Speaker Change: We want to kind of strengthen the balance sheet again, so needs of the business, needs of the balance sheet, and then we should be in great shape to
Speaker Change: See where we are in the current, in that environment, as we look out to the second quarter, as to what the appropriate, what feels like the appropriate kind of proportion of free cash flow to allocate to the buyback.
Speaker Change: So if I'm hearing your answer, the preference is buy back over dividend. Is that fair?
That's correct.
Great. Thank you very much.
Speaker Change: And once again, if you would like to ask a question, please press the star one.
Speaker Change: And your next question comes from the line of Tanya Jakuskonik with Scotiabank, please go ahead.
Tanya Jakuskonik: Yes, good morning and thank you for taking my questions and congrats on making your guidance.
for 2024.
Speaker Change: I just wanted to go back to maybe Claude, can you, on the sequencing...
of your mind plans through 2025.
Speaker Change: Can you just remind me what major shutdowns, if any, are at any of your operations? I'm trying to offset the seasonality that you see at Fort Knox and the wet season in Brazil, so I'm just trying to see when your down times are at any of your other operations.
Speaker Change: For the last couple of years we've been working towards flattening those jagged, shark-toothed type performances.
Speaker Change: through scheduling maintenance activities in a way that they're more a part of the process. We don't have major upgrades and shutdowns at any of the sites now.
Speaker Change: where it's the segment of the bull mills. So we're managing that and to Andrea's point earlier on, this is the year that we've actually got the
Speaker Change: the tightest range between every single quarter, so we're going to manage that and manage the performance of each of those sites accordingly.
It's I mean it's
Speaker Change: Typically we've had if we look back over the last you know number of years our average cash balance has been about 500 million so you know that's where we typically like to be and some of that is just you know efficiently moving cash around around the world.
Tanya Jakuskonik: as a minimum. Right, but again we are thinking about the future, we are thinking about those notes and you know we're again Tanya we're going to look for the
Tanya Jakuskonik: Great balance, if you will, on pre-cash flow as to return and continuing to strengthen the balance sheet.
No, yeah, I appreciate that. Just wondered what that.
Tanya Jakuskonik: what you would feel comfortable on holding just for a two million ounce business.
Tanya Jakuskonik: If I could just continue maybe to actually follow through you, just I'm looking and listening to, and thank you for that slide on page 20.
Tanya Jakuskonik: about, you know, your two million ounce production profile till the end of the decade. I think that would assume you have La Cuepa and those additional, you know, pits, laybacks or whatever that gets you to the end of 2030.
Speaker Change: the end of the decade. When do you have Curlew in? Like, is that a 28? Could we fit in? And I remember...
Speaker Change: Once conference calls would be about 100,000 ounces. Is that still feasible?
Speaker Change: Yeah, I think you're right in the zone there, Tanya. When people have asked us in the past about how we will maintain the 2 million ounces,
towards the end of the decade. I basically say
you know they're
Speaker Change: There's four things, two of which we just keep doing what we're doing. We keep mining at Lacoipa, we keep mining at Bald Mountain. So that's the two that we keep doing.
Speaker Change: And there will be two other things that are new, that we haven't been doing, and that is Curlew and Phase X.
Speaker Change: And as you've seen with the results on the drilling, they're moving along very nicely. We're really happy with how they're going.
Speaker Change: There is, you know, one main remaining permitting action that we've spoken about before, which is really just
Speaker Change: getting the permit to increase the height of the tailing storage facility when we convert to dry stack tailings.
Speaker Change: The rest of our permits are in place. So that is a bit of a milestone permit in terms of controlling the timeline. After that, we're already at the ore body underground. We're already in a pretty good position to get into development fairly quickly.
Speaker Change: So we do, you know, we haven't released specific guidance yet, but 2028 is a reasonable assumption on how we go through that permitting and construction path.
Speaker Change: Okay, and then how do you think about then external opportunities versus your internal opportunities? You've got a lot for, you know, life extension and then obviously we've got Lobo Marte, Marikunga.
Speaker Change: Great Barrel coming in towards the end of the decade and into the 2030s.
Speaker Change: How do you look at your, you know, evaluate external opportunities? Would you say you're more focused on production versus development?
Thanks, Katie.
Speaker Change: Look, I think the key here is we don't feel under pressure to go out and do anything.
necessarily to
Speaker Change: gain production immediately. We're very happy with our internal pipeline portfolio. That allows us, you know, that allows us to be patient and really look for value, whether it's in an earlier stage or in a production.
Speaker Change: When I get the M&A question, which I get a lot, I mean, I think the history speaks a lot for what we have demonstrated in terms of discipline.
Speaker Change: I mean really if you go back and you look at what acquisitions have we done
Speaker Change: In the last 10 years, there's maybe three or four. You know, we did the Round Mountain Vault back in 2015.
bulk on synergistic.
We purchased some power plants in Brazil in 2018.
you know, Man Cho and Pete Gould in 2020.
Speaker Change: So we're very careful. We do look at external opportunities, but we have to see the value proposition. And if we do, well, we'll move forward, but.
It's, you know, it's...
It's challenging sometimes to find those value opportunities.
Speaker Change: Great Bear obviously was the last time we did an external, that was the
Speaker Change: We purchased that in 22 and we're extremely pleased. We'd love to find more of those if they exist, but we're not feeling under pressure to go out and do something just for the sake of maybe getting higher production.
Speaker Change: I appreciate that. I just wondered if you thought there's opportunities for you to add additional inventory like beyond 2030, whether that made sense for you.
Speaker Change: No, it's a good question. Yeah, I look and I think, you know...
When I
sometimes get the question.
You know, I'm not, per se, worried about...
Speaker Change: When I'm thinking about the future of the company, we are
Speaker Change: We're thinking about mid-30s and beyond, and so, you know, that's kind of the timeline, you know, we're thinking about. So, yeah, if there's good opportunities to add what we think is quality to the inventory, we'll look at it.
But it's quality and again, I would say
Speaker Change: One of the advantages we've had over the last few years in terms of our cost structure,
Speaker Change: is a lot of the newer stuff that we have brought on, and some of this is internal, whether it was the restart of La Coipa or the ramping up of the mill of Tassius, we've been bringing on quality, meaning better grades.
Speaker Change: And those better grades have driven our margins, which has been a natural offset to some of the cost pressures that maybe some others have faced.
Speaker Change: negotiations with First Nations to first make how that's going and what's the timeline of getting all of that.
Speaker Change: We'll start with your AAX question, if that's okay. The two remaining permits that you're referring to, one is what we refer to as an industrial sewage treatment and construction permit, which we call an ECA.
which stands for Environmental Compliance Approval, and
Speaker Change: We don't obviously need that today, but we're targeting to get that sort of later in the spring.
Speaker Change: And the second outstanding permit is our operations permit to take water.
which, again, we don't require today, but we're targeting.
Speaker Change: the back half of 2025 later in 2025 for that particular permit. We have to be clear we have everything we need for our current AEX activities and have received four of those permits to date.
On the,
First Nations question that you asked about
Thank you. Bye. Bye.
Speaker Change: Relations there are very strong. I won't go into a lot of detail on that one, but we are in the midst of negotiations with them on our project agreement, or what's more commonly called an IBA. We've exchanged drafts, we've had economic discussions, that's going well.
Speaker Change: and we are, you know, we're sort of, you know, targeting, you know, the back half of 2025 to get something done there. And last but not least, obviously on the main project, we're in the midst of our federal...
Speaker Change: permitting process there, which involves the filing of what we call an impact statement. And again, we're targeting the back half of 2025 to get that done.
Does that answer your questions, Tanya?
Speaker Change: Just on the negotiation with First Nations, would it be safe to assume that all the negotiations are just sort of the normal and classic?
Speaker Change: you know, items that are being done in other, you know, mining areas in the Red Lake District, let's say that are normal to what's been already approved and done.
Speaker Change: Yes, yes, yeah, we're, yeah, we're, there isn't, yes, we're not, we're not sort of trailblazing here where, you know, you would expect to see the, you know, customary provisions that you would typically see in an IVA and we're discussing those in our, in our negotiations.
Okay, great. Thank you and good luck.
Can you hear me?
Speaker Change: Thank you, and there are no further questions at this time. I would like to turn it back to Paul Rollinson for closing remarks.
Speaker Change: Well, thanks, operator. Thanks, everyone, for dialing in this morning. We.
Speaker Change: Look forward to catching up with you all in person in the coming weeks and months. Thank you.
Speaker Change: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Please wait. The conference will begin shortly.