Kinross Gold Corporation

Good morning. My name is Adam, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ken Ross Gold Corporation's Second Quarter 2020 Results Conference Call and Webcast. All participants are in a listen-only mode 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 session, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. At this time, I'd like to turn the call over to Mr. Tom Elliott, Senior Vice President, Investor Relations and Corporate Development. Mr. Elliott, you may begin your conference.

Thank you, and good morning. With us today, we have Paul Rowlinson, President and CEO of McKinross Senior Leadership Team, Andrea Friese, Paul Tamori, and Jeff Gold. Before we begin, I'd like to bring to your attention the fact that we will be making forward-looking statements during this presentation for a complete discussion of the risks, uncertainties, and assumptions, which may lead to actual results and performance being different from estimates contained in our forward-looking presentation. Please refer to page two of this presentation, our news release dated July 29th, 2020, the MD&A for the period ended June 30th, 2020, and our most recently filed AIF. all of which are available on our website. I'll now turn the call over to Paul.

Thanks, Tom, and thank you all for joining us today. First and foremost, I would like to acknowledge and thank all of our hardworking employees who have helped us deliver strong results while managing through their own unique challenges during this pandemic. The safety of our employees and their families in the communities that we operate continues to be our first priority. I also want to say that our thoughts are with all of those who have been affected by the pandemic. Kinross delivered strong results in Q2, and we are pleased with the significant growth in margins, earnings, and free cash flow. This morning, you will hear how our company is technically strong with an excellent operational track record, is managing the impacts from COVID, is delivering very strong free cash flow with peer leading yield, and has numerous projects to continue adding mine life and a number of exciting exploration opportunities. Before that, I will comment briefly on the quarter and a few key developments. Andrea will provide a financial review, and Paul Tamori will summarize our operating performance. We will also give an update on how we are managing through the pandemic. All of the company's operations performed well during the quarter. Once again, though, our three largest mines, Paracatu, Cupol, and Tassius, accounted for over 60% of total production and delivered the lowest cost in the portfolio. More than 50% of our production currently comes from the Americas, the U.S. and Brazil, with the balance from Russia and West Africa. Over 80% of our production comes from five key assets in five separate regions. With our recent acquisition in Russia and taking into account our track record of exploration success, we expect that these assets and regions will have mine lines of at least 10 years. We also had another strong quarter in terms of free cash flow. and generated approximately $220 million during Q2. At current spot prices, free cash flow is expected to remain very strong for the remainder of the year. As a result of our continued strong cash flow, our investment-grade balance sheet strengthened further, and we finished the quarter with just over $1.5 billion in cash. in part due to the draw on our revolver. Andrea will comment further on the revolver. However, I would note that we did repay $250 million of the facility subsequent to quarter end. At this time, we are not formally reinstating our guidance, but continue to work towards our initial targets released in February. Our key results for the first half of the year are tracking within the original guidance ranges albeit at the low end of production due to some pandemic-related impacts. However, we do continue to expect the second half of the year to be the stronger half for both production and costs. During the quarter, we announced an agreement in principle with the government of Mauritania to enhance our partnership at Tassius. We are pleased to have been able to negotiate this mutually beneficial agreement with the government and add to our positive momentum and a decade of success in the country. And earlier this month, we released the pre-feasibility results on our Lobo Marte project in Chile, which represents an excellent growth opportunity. Lobo is a large-scale, long-life asset located in one of the world's top mining jurisdictions. The PFS results show that it has the potential to support our long-term production profile and increases both our reserves and reserve life index by 25% compared with the end of 2019. The project offers attractive returns at consensus long-term estimates, driven by good grades, a modest strip ratio, and low unit costs. As we now move forward with the feasibility study, we will continue to prioritize balance sheet strength and discipline capital allocation. Any construction decision will not be made for a number of years until the feasibility study and permitting have been completed. With respect to capital allocation, our team has managed the company through a wide range of gold price environments and has always remained disciplined on costs and allocating capital. Current gold and energy prices and FX rates are favorable, and we expect to continue producing significant free cash flow over the coming years. For example, if gold prices stay above $1,800 for the remainder of the year, we would expect to generate over $900 million of free cash flow during 2020. Over the coming months, we will continue to be disciplined with respect to the use of our balance sheet, including leveraging our strong technical expertise to uncover attractive high-return investments that make sense for our business and our shareholders, continue reducing debt as maturities come up, modestly increasing exploration spend to leverage our numerous prospects to potentially add ounces in mine life, and post-COVID uncertainty and potential return of capital. Given our internal opportunities, we feel no pressure to make external investments of any sort unless we are comfortable with the risk-reward profile. We also have several areas within our portfolio that may present attractive optionality for capitalizing on a high gold price without risking significant capital. and without altering the resiliency of our business should prices decline in the future. I'm now turning the call over to Andrea for a more detailed review of our financial results.