Kinross Gold Corporation

Good morning. My name is Devin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ken Ross Gold fourth quarter 2022 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 at any time, press the pound key. Thank you for your patience. I now turn the call over to Chris Lichtenheld, Vice President of Investor Relations, you may begin the conference.

Thank you and good morning. With us today, we have Paul Rowlinson, President and CEO, and from the Kinross Senior Leadership Team, Andrew Freeborough, Claude Schemper, Ned Jalil, and Jeff Gold. For a complete discussion of the risks and uncertainties which may lead to actual results differing from estimates contained in our forward-looking information, please refer to page three of this presentation, Our news release dated February 15th, 2023. The MD&A for the period ended December 31st, 2022, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

Thanks, Chris, and thank you all for joining us. Most of you will be aware that we hosted a conference call earlier this week to provide an update on Great Bear. If you haven't had the opportunity to listen to our presentation, we encourage you to access the replay through our website. Today, we will focus on our fourth quarter and full year results and our outlook going forward. We faced a number of headwinds in 2022, most significantly related to geopolitical events and substantial cost inflation. I'm proud of how we navigated the challenges and believe we are well positioned going forward. I believe we have the right team in place to meet our commitments and deliver strong results from our portfolio. Looking at the fourth quarter specifically, we had our strongest quarter of the year in terms of production and cash flow. We made progress across the portfolio, producing just under 600,000 ounces in the quarter and approximately 2 million ounces in 2022. Perica 2 had an exceptional quarter, Tassius had record production and grades, and La Coypa continued to improve, reaching our targeted production levels in the fourth quarter. In today's environment, our business is well-positioned to continue generating significant cash flow going forward. Last year, through our regular dividend and our enhanced share buyback program, we returned approximately $455 million to shareholders. And on a cumulative basis, we have repurchased approximately 100 million shares since we launched our buyback program in the second half of 2021. This year, we will continue to pay our quarterly dividend of 3 cents per share and continue with our flexible buyback program. Moving to our outlook, Andrea will elaborate on some of the detail, but we are reaffirming our stable production outlook of 2.1 million ounces in 2023 and 2024, followed by 2 million ounces in 2025. With our portfolio anchored by Perikatu and Tassius, and further complemented by La Coypa, the Tassius 24K project and Manchot coming online next year we are well positioned to maintain our production. Costs are expected to be slightly higher in 2023 relative to last year, mainly as we have a full year with elevated input costs that we experienced in the second half of 2022. Looking longer term, our portfolio maintains excellent optionality. In particular, We will continue to evaluate opportunities for expansion in Nevada and remain excited about our underground potential. Before turning it over to Andrea, I want to comment on ESG. We are proud of our consistently strong performance in this area. In 2022, we were awarded the Alaska Miners Association Environmental Stewardship Award for our abandoned mine restoration initiative. We advanced our commitment to diversity, equity, and inclusion across the company. We allocated financial aid, humanitarian aid, and other contributions in Mauritania to help the country manage the impact of extreme weather events. And we advanced our green energy targets with the construction of the Tassius solar plant which is expected to come online in the second half of this year. With that, I will now turn the call over to Andrea.

Thanks, Paul.

This morning, I'll discuss financial highlights from the quarter, provide an overview of our balance sheet and capital allocation program, and comment on our guidance and outlook. As Paul noted, we finished the year with production of nearly 2 million ounces. In the fourth quarter, we produced 596,000 ounces, which was up by 13% over Q3 and was the highest production quarter for the year as our operations continued to show improvement. Our Q4 cost of sales was $848 per ounce, which is down from the previous quarter and represented the lowest cost quarter of the year. For the full year, our production cost of sales was $937 per ounce, All-in sustaining cost was $1,236 per ounce in the fourth quarter, a decrease from the third quarter, driven primarily by the increase in production. For the full year, our all-in sustaining cost was $1,271 per ounce. Our fourth quarter adjusted operating cash flow was $496 million, up from $259 million in the third quarter on higher production and lower costs. For the full year, adjusted operating cash flow was over $1.2 billion. Free cash flow in the quarter was $158 million and was $238 million for the full year. CapEx was $317 million in Q4. Full year CapEx of $764 million was in line with our revised guidance. Turning to the balance sheet, our financial position is strong and is expected to remain strong this year and beyond. We ended the year with $418 million of cash and approximately $1.8 billion of total liquidity. Our trailing 12-month net debt to EBITDA ratio was relatively stable as of year end at 1.7 times. Our next debt maturity is in 2024 when we have $500 million of senior notes coming due. We expect to refinance these notes sometime this year. Turning now to our capital return program. We purchased $240 million of shares in the fourth quarter and a total of $300 million in 2022, completing our 2022 buyback commitment. We have effectively now repurchased the shares issued in the Great Bearer transaction and then some. Through dividends and share repurchases, we returned $455 million to shareholders in 2022. As Paul noted, this year we will continue paying our annual dividend of $0.12 per share and continue executing our enhanced buyback program, which now becomes dynamic and based on cash flow generation. As a reminder, we plan to allocate 75% of excess free cash to share repurchases in 2023 and 2024. We will evaluate the buyback quarterly based on cash flow generation. As a reminder, we also have guardrails in place to protect our balance sheet in a downside scenario. For example, the buyback will be paused in the event that our leverage ratio increases above 1.7 times net debt to EBITDA. For next year, we're expecting production in the range of 2.1 million ounces, cash costs of $970 per ounce, and all unsustaining costs of $1,320 per ounce. Capital expenditures are expected to be in the range of $1 billion, split roughly evenly between sustaining and non-sustaining items. For 2024 and 2025, we would expect cash costs and all-in sustaining costs to be in a similar range. With respect to topics in these years, we expect a decline each year based on currently approved projects. However, in order to sustain our 2 million ounce production profile beyond 2025, we expect to approve additional capital projects, which would likely maintain capex around the $1 billion mark. Q1 of this year is expected to be a particularly low production quarter as a result of seasonality at Perica II and the UFP fleets operations, as well as planned operational shutdowns at Tassius and La Coypa. Claude will elaborate on the operational shutdown. Cash flow is also expected to be lower in the first quarter because of the lower production, as well as timing of certain cash flows, including related to tax payments in Brazil and interest payments. I'll now turn the call over to Claude.

Thank you, Andrea. This morning, I'll provide a brief update on our operations. We saw a strong performance out of our two cornerstone assets at TerraZest and Perica2. TASI has continued to ramp up, achieving its highest production quarter yet, and Perica 2 achieving its second highest producing quarter on record. These two assets provide over half of our ounces company-wide, and we are confident in their ability to hit production targets and provide significant cash flow in 2023, anchoring our portfolio. The rest of our portfolio is also performing well, with a combination of our four other mines hitting the highest production of the year in Q4. and achieving a 35% increase in production in the second half when compared to the first half, primarily due to the ramp-up at La Coypa and the seasonality of the U.S. heap leeches. Q4 saw continued strong performance out of the U.S. assets, with the highest production of the year and a 26% increase in production in the second half of the year compared to the first. Starting with Fort Knox, production increased further last quarter, driven by record tons and ounces stacked onto the leech in 2022. with 50 million tons and over 300,000 ounces stacked on the pad. At Bald Mountain, we continued to see higher production levels in the fourth quarter, driven by higher grades stacked earlier in the year, resulting in a 37% increase in production during the second half of the year. Round Mountain maintained high production levels throughout the second half of the year and saw an increase in grade stacked, which we expect to contribute to the overall increase in production in 2023. Perica 2 had exceptional results in the fourth quarter, achieving its second highest production quarter on record, producing 181,000 ounces for the quarter and 577,000 ounces for the year. We continue to see outperformance on both grades and recoveries at Perica 2, with strong performance in both the mine and the mill. This cornerstone asset continues to deliver high production levels at our lowest cash costs, with the fourth quarter providing the lowest cash cost of the year at $711 an ounce. At TASIEST, the operation delivered a quarterly record production of 143,000 ounces, driven by a record processing grade of 3.2 grams a ton, and achieved a full year production of 539,000 ounces. Let me expand a bit on what is going on for 2023 and why we expect that we're going to hit our 610,000 ounce guidance this year at TASIEST. The plant is currently undergoing one of the planned shutdowns associated with the 24K expansion project. As such, throughput in the first quarter of this year is expected to average around 17,000 tons a day. And based on the schedule for shutdowns and ramparts, we are targeting average throughput between 20 and 21,000 tons a day in 2023 to produce our planned 610,000 ounces. We have already accounted for the 24K expansion shutdowns. and the time to ramp up throughput in our guidance and expect to achieve the 610,000 ounces on the back of strong grade and ore supply from both stockpiles and the pit in 2023. We achieved another monthly production record at TASIUS in January with 54,000 ounces produced and have already hit our February production target prior to our shutdown. TASIUS 24K construction is progressing well. and the project remains on schedule to initially reach throughput of 24,000 tons a day by mid-2023, followed by a ramp-up period before sustaining that level. At La Coypa, we saw substantial progress in the fourth quarter with production of 68,000 ounces. Throughput continues to improve and averaged over 13,000 tons a day for the last two weeks of December. La Coypa has a planned mill shutdown in February for maintenance works aimed at increasing reliability. We are pleased with our progress at La Coypa and expect to produce 240,000 ounces in 2023, which, with planned shutdowns, is based on the mill achieving average throughput of between 12,000 and 13,000 tons a day. I'll now pass the call over to Ned for an update on our projects and exploration.

Thanks, Claude. I'm going to focus my comments on our reserve and resource update, Round Mountain Underground, and Nanshow Projects update, before providing an overview of our exploration initiatives. We had kept our reserve pricing at $1,200 for the past eight years. However, we have seen gold prices rise several hundred dollars over the past few years, and we believe the $1,400 reserve price better reflects the current environment. and is still sufficiently conservative given where gold prices are today. It is important to note we are not making changes to our mine plans as compared to last year on the back of this change in reserve price. Looking at our total mineral inventory, year over year, excluding our divestments, our combined reserves and resources were stable. as the significant additions at Great Bear Offset Depletion. Moving to Round Mountain, we are focused on progressing our underground opportunities while continuing to mine in Phase W1 and Phase W2 open pits. For Phase X underground, we have started to develop our planned portal area in the bottom of the pit. and we expect to start underground development of the exploration decline in the first half of this year. At Gold Hill, we are continuing exploration drilling and advancing permitting, targeting start of an exploration drift next year. Our exploration results at both Phase X and Gold Hill over the last quarter continue to reaffirm our decision to progress underground opportunities. We are excited about the potential for higher margin underground production, as I will highlight shortly. We are also continuing to evaluate and optimize the open pit pushbacks, phases S and W3, which remain in reserves and are economic. We will study the potential mining of these pushbacks with sustained improvements in macroeconomic conditions. Construction at Manchot is progressing on schedule and on budget. We remain on track for first production in the second half of 2024. The 2022 early works construction program was completed on budget and mill modification to process Manchot ore at Fort Knox are underway. Permitting is progressing well and a public comment period is expected to open in 2023 regarding the company's application. 2022 was a successful year for our exploration team. Beyond the exploration results at Great Bear that we covered in detail on Monday, we also had an active year with exciting results from our brownfields and greenfields portfolios, and I would like to spend a few minutes speaking about these. We drilled an additional 109 kilometers on the brownfields and greenfield projects beyond the 225 kilometers drilled at Great Bear for a total of 334 kilometers of exploration drilling in 2022. Our Brownfields team identified and expanded on exciting opportunities across our operating assets, as you will have seen in our press release. In Alaska, drilling at Fort Knox provided high-grade mineralization, extends 300 meters outside the current life of mine pit, along the Dandelion Ore Shear. At Perica II, we have begun a brownfield exploration program testing advanced targets with known mineralization and within trucking distance of the mill. We are particularly excited about the exploration results at our underground targets in Nevada and our potential for resource expansion at Curlew. Top underground drilling at Bald Mountain yielded one of our best holes of the year. with 24 meters at 19 grams per ton, and also confirmed that our oxide mineralization extends non-mineralization down dip. We will cover Round Mountain and Curlew in more detail on the next slides. From a greenfield perspective, we continue to focus on areas that have potential for high-grade gold mineralization in Canada, Nevada, and Finland. During 2022, we completed approximately 49,000 meters of drilling on our projects, which returned encouraging results to follow up on this year. At Curlew, exploration drilling resulted in an increase in resources with just under 400,000 ounces of measured and indicated and just over 500,000 ounces of inferred, both at around 6 grams per ton. We continue to intersect high-grade mineralization, confirming continuity and extensions to previously modeled veins, and resulting in the discovery of multiple new veins. With the access from the exploration drift completed in 2022, we expect to continue to expand the resource through our 2023 drilling campaign. As discussed earlier, the exploration drilling at Round Mountain continues to reinforce our decision to focus on underground opportunities at Round Mountain. The drilling over the last quarter confirmed the continuity of Phase X underground with continued results showing wider mineralization in the four to six grams per ton range. And at Gold Hill, our drilling extended two major vein zones and intercepted several new veins, reinforcing our view of this as a higher-grade opportunity with narrower widths than Phase X, but still clearly sufficient widths for mechanized mining. As discussed last quarter, the combination of the higher productivity 4 to 6 grams per ton mineralization at Phase X and narrower high-grade mineralization at Gold Hill is an exciting opportunity that we will continue to pursue. We are looking forward to getting underground at both targets to better explore the down-dip extension of the mineralization. Now, I will turn over the call back to Paul.

Thanks, Ned.

In closing, reflecting on 2022, we faced several challenges and significant change. We have now addressed those challenges, and I am confident we are coming into 2023 well positioned to deliver on our commitments and produce strong results from our portfolio. Looking forward, we have a solid production base, an attractive return of capital program supported by a strong balance sheet, a great pipeline of projects, and promising exploration opportunities. With that, operator, I'd like to open up the line for Q&A.

At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. Our first question comes from Fahad Tariq with Credit Suisse.

Hi, good morning. Thanks for taking my question. Could you talk a little bit about the puts and takes on the underlying inflation that's really driving the year-over-year increase in cost next year? I mean, production is increasing. Some input costs presumably are coming down, diesel, et cetera. I'm just trying to get a better understanding. I do appreciate it's a full year of inflation. I'm just trying to get a sense of what is still driving from an input cost perspective the higher overall cash cost in ASIC. Thanks.

Yeah, I'll hand off to Andrea here. I think... As we narrow into it, one of the things we've said last year about inflation is while we see it everywhere in the world, we have actually felt it mostly in the U.S., in Nevada. And that's a key part of our story here as to what's happening in the U.S. But maybe, Andrea, you can elaborate.

Sure. Maybe I'll just cover some overall comments on the cost guidance and address that as part of my answer here. We do have a bit of an uplift in production in 2023, and that's coming from Tassius and La Coyza, which are lower cost. So there is a bit of a tailwind. But that's being offset by, well, generally the U.S. So we did provide a country-by-country cost guidance in the appendix to our press release. Paul mentioned in his opening remarks and then just now that We're factoring in inflation basically on reflecting where costs were in the back half of 2022. So we did see an increase throughout 2022. So we've got a full year impact of costs at that level. And we've estimated that at around a 5% factor. You commented on oil prices. We've used a $90 oil price in our cost guidance. So you know, we haven't factored in a benefit beyond $90 an ounce. And there's some sensitivities in a press release as well that we continue to see oil prices where they've been so far this year. So the increase is really in the U.S. sites. And as Paul said, that's where we saw the highest levels of inflation. We also have lower production coming from the U.S. in 23 as compared to 2022. So we've got a bit of a denominator impact where, you know, cost per ounce goes up as a result. And then the last factor on cost in the U.S. is the way our inventory accounting works on the heap leaches. We added cost to the heap leaches in 2022, and those were, you know, the inflated costs. And so we see that coming through the P&L to our cash costs in 23 as those ounces come off the pad.

Okay, great.

And maybe just as a quick follow-up, the one element that we didn't really talk about is labor inflation. Can you just touch on that in the U.S.?

Is that something that is also a headwind? Yeah, like quickly...

I can touch a little bit on that. So we are still seeing that the demand is still high in Nevada, for example, in the U.S., and labor costs are still at high levels compared to early 20s.

Okay, great. Thank you.

Our next question comes from Anita Soni with CIBC World Markets.

Hi, good morning, everyone. Thanks for taking my questions. So first, can I go to the, the juror's statement and try to understand what happened at Round Mountain and sort of what the path forward is? I think one of my questions is you're guiding to 2 million ounces for 2025. And I think that's a new outlook, like the first time you're providing 2025 guidance. And I'm just trying to understand what Round Mountain looks like, because I think on the last Q3 call, you were saying maybe 50 days, 100,000 ounces. And I have a few things in my model coming off in 2025, which is Round Mountain levels of production, Fault Mountain, you can see from the reserves, it's probably not got much more than two years left at the stage in the reserves. And then Tavius, I'm wondering how long these grades continue. So those are my three questions, sort of trying to understand the the reserve statement as they relate on round involved and how that translates into 2025 production and similarly on TAS what the grades are going to do into 2025.

Yeah, thanks for your question. I'll start with a number of points that could help you understand how 2025 looks like. So in terms of Tassius, I think maybe you're comparing back to the TR and what we've done is we've flattened the grades over the next several years to sustain a high production on Tassius. So in 2025, for example, for Tassius, we're looking at a production of 420,000 to 450,000 ounces. When it comes to Round Mountain, again, I would like to say on Round Mountain, as you know, we talked last time that we've placed Phase S and Phase W3 on hold as inflation was still rising, gold prices were softening a little bit, and we continue to evaluate these pushbacks because they are part of our reserves. We just need to understand where the gold price is, and understand where inflation is, basically the macroeconomic condition, confirm that, do a little bit more of an optimization regarding the design of these pushbacks, and potentially at one point they could be turned back on. But if I don't consider phase W3 or phase S, we look at a production of approximately 70,000 ounces from Round Mountain. prior to the start of the underground. So that's on Round Mountain focused on 2025 specifically. Again, that is if we do not turn back phase S or phase W3. If we just finish W1 and W2, then start the underground.

But can I pause with you? Sorry, can I stop you there and ask you then on the two million ounces that you're saying in 2025, does that consider Phase S and Phase W3 coming in, or does that exclude those two things?

It excludes Phase S and W3. Okay. The 70,000 ounces only come from the production from W1 and W2 that we're going to mine over the next two years. Okay.

All right, so I continue on with Bolton, I guess.

I think you asked about Bald Mountain, if I'm correct. So regarding Bald, we're looking at a production of 150,000 ounces to 170,000 ounces for Bald Mountain. And then, you know, regarding Manchot, maybe it's not in your model, but we see Manchot coming in and potentially 220,000 ounces to 240,000 ounces from Manchot.

And that's with the Manchot deposit specifically, just itself?

That's with Manchot, and then Fort Knox would be 250,000 to 280,000 ounces.

250,000 to 280,000 at Fort Knox. Okay, and so Manchot right now is kind of like, at that rate, is maybe two and a half years, right?

On the reserve?

More.

more like uh it's not the same production level we're seeing it you know the highest year production is potentially going to be 2025 with the numbers i just told you and then we see production in 26 and 27 uh approximately 150 000 ounces for those two years okay all right um and then the other question that i had and i apologize to everyone um i was just uh wondering when

When you look at your buybacks, you said you're looking at 75% threshold on that. What gold prices? I mean, are you projecting to have any more buybacks this year?

Yeah, Anita. I mean, obviously, it's gold price dependent. But at the gold prices we've seen so far, this year, we would be expecting to be doing buyback this year. Having said that, it's sort of on a quarterly basis that we'll assess it, and given the lower production quarter in Q1 and lower cash flow quarter, it's probably more towards the second half of the year.

Okay, thank you. I'll leave it there and let someone else ask questions. Thanks.

At this time, I would like to remind everyone, in order to ask a question, press star 1 on your telephone keypad. Our next question comes from Lawson Winder with Bank of America Securities.

Great. Thank you, Operator, and good morning, Paul and team. Thanks for your comments today. Can I please ask about the 24 CapEx Guide? Would you be able to provide us a breakdown and sort of if I missed it, between sustaining and growth and the $850 million? And then also give us an idea if, so if you're going to go to a billion dollars, that extra $150 million, is that going to be just growth or is there a sustaining element there too? And what are kind of some of the key projects that you might see driving that in 2024?

Thanks.

So, I mean, I'll start by saying in, you know, 2023, we've said it's sort of roughly split between sustaining and growth. We haven't given detail on, you know, where the CapEx is in 2024, but 50-50 is probably, you know, a good rule of thumb going forward. We've said that 850 is based on approved projects, so You know, my comment about it potentially floating back up to $1 billion is just, you know, looking to maintain that 2 million ounce production beyond 2025. So, you know, there's likely room between the $850 and $1 billion if we end up coming back to some of the round mountain open pits. But, you know, TBD on that, we'll report back on that as we go through the year here.

Yeah, got it. And then so just to be clear on the sustaining capex, it's about $510 million that you're expecting this year, plus minus 5%, obviously. And then that would drop to $425, half of the $850 million. What is it that's driving that expected decline in 2024 sustaining capex, guys?

I think that's Manchow that's really driving the decrease.

Okay, thanks, Andrea. That's super helpful. I wanted to touch on Nevada as well to Fahad's question just regards to inflation there and perhaps a little bit more color on the labor situation. So there's a lot of robust mining operations that are growing and hiring. There's a new operation ramping up. And I was just curious if you're seeing any impact on turnover and whether or not you know, you can maybe help quantify that and give us an idea of, like, if you look at 2022, what would have been your turnover at your Nevada operations versus, say, 2019?

Yeah, just very briefly, I think two elements there. One, our turnover is relatively stable, albeit that it's higher than anywhere else in our organization. So we do have a lot more programs in terms of recruitment opportunities and doing things a little differently. We're going further afield in Nevada to recruit. But all of the operations, as you know, there's a lot of activity are under significant pressure to supply labor. On the flip side of that, as we move into these underground operations and different things, it's a different skill set. And so we are doing some more higher level of contracting work than we normally would. And that's providing us with the stability to be able to execute these projects.

Okay, thanks for the comments. And if I can actually follow up on the buyback question. Andrea, thanks for your comments on that, that it's going to be driven by the gold price. I mean, that's abundantly clear. There was also like a net debt to EBITDA element to that too. And if I just look at where your net debt to EBITDA was at the end of the year, I mean, it was kind of around that 1.7 times threshold there. which which is great it implies that I mean you certainly have the the room on the balance sheet to be active in the in the buyback and I'm just curious how that factors in to your thinking or if it still does yeah I you know that's sort of one of our as we call them guardrails so as long as we're you know as long as we don't get above that 1.7 then we would be executing on the buyback so

as you said, gold price dependent, but we wouldn't expect that to be an issue at least in the second half of the year. But as I said, Q1 is going to be a little bit lighter.

And is that just a free cash flow calculation? Are you guys just looking at expected free cash flow, and if it's not going to be positive, then you're very unlikely to be active in the buyback?

Well, it's free cash flow. So operating cash flow after the needs of the business after interest and after dividends. So it's kind of take our free cash flow and then after interest and dividends. And that's what we're calling excess cash. And then the 75% factors into that. So, you know, I mentioned that Q1 is a lower production quarter as well as some, you know, sort of seasonal cash outflows that we always have in Q1. So that's why I'm kind of pointing to the second half of the year.

Super helpful. Thanks very much.

Our next question comes from Carrie McRuey with Canaccord Genuity.

Hey, good morning, everyone. You mentioned Q1 being the low quarter from a production standpoint. Just wondering how low should we be thinking and, you know, is the quarterly profile going to sort of strengthen through the year kind of like it did in 2022?

I think, Carrie, if you look at Q1 as You know, probably in the low 20% as a proportion of our total production guidance for the year. I don't think it's as pronounced going quarter to quarter, two, three, four. So I then think about the second half of the year being in the kind of low, like, 52%-ish is how I would look at it.

Yeah, I'll comment that it's not as extreme as it was last year, but the two major pieces being LaCroix Quantasius for February, and then we pick it up again, and that's what's driving the low first quarter. Otherwise, the rest of the quarters are pretty average across the board.

Okay, that's helpful. And then maybe just back on the CapEx. decline over the next couple years, you mentioned Round Mountain, but other than Round Mountain, what other projects could slot in there before you get to Great Barricade and Oaks?

Yeah, thanks. Thank you very much for the question. So, as you know, you know, we have the two corner assets, Tassius and Barricade 2, and then we have LaCroix to Fort Knox, Round Mountain, Bald Mountain, and Manchot coming on line with Fort Knox. So, when we look at the future, We're looking at an extension of La Coita. We're very excited on that. The potential there is great. We're also looking at the Round Mountain underground. And like what you mentioned and we mentioned earlier, the restart of the open pit pushbacks, either Phase S or W3. We also have Curlew. We have exciting exploration results from Curlew. The combination of these projects in addition to Great Bear will put us at a comfortable 2 million ounces towards the end of the decade.

Thanks. Maybe one last one. In terms of the U.S. operations, it sounds like some of the higher costs this year are really costs that were incurred last year. when we think about 2024, should we be assuming a similar level to the guidance this year, or should we assume that costs come down a little bit in 2024? Or is it too soon to say?

You know, I provided the comment that I would think about costs as kind of being similar to 23 for 24. You know, we'll see how we go here and, you know, get more precise as we get through 2023. But I would expect the U.S., you know, in particular... Round Mountain to continue to have higher costs. We've talked about that on previous calls, and we see those costs being similar to the second half of 2022 to higher in 23, and so that's likely to continue through 24 as well.

Okay, thanks.

Our next question comes from Mike Parkin with National Bank Financials.

Thanks so much. Are we going to get an update on the La Cueva Lace of Mine extension, or is that something internally that you guys are only reviewing?

Thanks very much, Mike, for the question. You know, we're at the early stage of the project. We actually have an internal project kicked off. So in terms of drilling, we're we're almost complete, but geological models are being developed and mine plans are being evaluated. Geotechnical work is advancing. Metallurgical testing is also advancing. Again, these are not necessarily new pushbacks for us. These are extensions of what we know, so we're familiar in the area. Nevertheless, we will go through our robust, you know, gate process of PEA, PFS, FS. And at the point where we see there's material information to release, we would do that in the future. Again, we do have solid production coming from La Coyta through 2025 and then 2026. So we do have several years ahead of us before we turn on the La Coyta extensions.

And it's really just getting in front of the permitting. and pushing the permitting for the stuff that we see around us.

Okay, so we probably aren't looking for an update on that this year then?

No.

Okay. And then with the Curlew Basin, like you've got just shy of a million ounces at a pretty good grade. Can you just walk us through high level what you're kind of thinking of where you need to kind of get to on resources or if you're already there to warrant kind of the kickoff of work to for restart and you just remind us where that asset sits with respect to permits like is it a very straightforward restart or is there a bit of a permit reinitiation phase that has to be conducted yeah thanks for that like

On Curloo, we're really excited about the potential. It's an amazing ore body for us when it comes to Curloo. We understand it very well. It keeps giving. I personally believe the ounces that we just shared with you, that's the start of that deposit. And we are now going to kick off, I believe our schedule is April, to kick off our pre-feasibility study. on Curlew as a project. Again, permitting is the next step for us, and we'll update you as we progress.

Okay. That's it for me. Thanks so much. Our next question comes from Anita Soni with CIBC World Markets.

Hi. Thanks. for taking up some follow-ups. Just in terms of Perica too, so we've got good grades this quarter. As we go into 2024 and 2025, what should we expect from that asset?

Yeah, thanks, Anita. In 2024, the grade does dip a little bit again as we are in a different location in the event. There's also a different phase that we're in. But we see that coming back up in 2025.

So 2024 is down and it's going back up in 2025, right?

Yeah, so we expect paraquat tea to be just over 500,000 ounces produced in 2024. But in 2025, it comes back to the same level as what we were experiencing last year and this year. Okay.

And then similarly, it's obvious, you know, also good grades in the quarter. So what should we be looking for in terms of grades in 2023 and 2024?

Again, we've been able to, during these significant work on the plant, we've been able to add to our stockpiles, so we're balancing the feed to maintain the, as I mentioned earlier on the call, 610 target for this year and then over 600 again for next year. We have, as Ned alluded to, smoothed the profile a bit more so that we don't drop off dramatically like in the previous year. iterations, it dropped right down to below 300, which is not really a great position to be, so 2025 is a bit higher as well.

I want to go back to the U.S. and the reserves. I apologize. At Falls Mountain, you added, in terms of the additions, it seems like there's a lot of tons added at very low grade. Just walk me what happened there. I have a calculation of the depletion and then the addition. It seemed like it was almost 12 million tons, but 0.2 gram per ton material was added. And I'm just wondering how that would work given the cost structure there, and what was the reason for that?

Yeah, your question, Anita, is specific to Bald Mountain, right?

Yes.

Okay, so on Bald Mountain, First, let's start with reserves, so the 2P material. So the main change there would be depletion. There's a little bit of redesign that added 100,000 ounces approximately. That's on the 2P material. On the measured and indicated part of the resource, I believe we've added around 100,000 ounces also. in terms of additions. And then as for the inferred material, I believe it was a wash between the measured and indicated and then the inferred. So measured and indicated went up by 140,000 approximately, and the inferred material came down by 140,000.

Okay. Can I maybe take that one offline? I was specifically asking about that $100,000 that you added in these reserves. It seemed like it was a bit low grade, so I was just wondering what the engineering around that was. But can I, more importantly, on round that one? Yes.

Sorry, go ahead. No, no, sorry. I was going to say, for sure we can take it offline. I can go back and check the funds and grades.

And then secondly, I just want to understand really the changes around Mountain. I know there's a lot of phases going on. I'm trying to keep up with phase X, phase F, phase W3, and phase whatever. But just looking at the actual reserve resource updates, essentially, you know, we lost about 400,000, 500,000 ounces. And I assume it went back into the M&I category. And I'm just wondering which phase that was, that went there. You're saying phase S and phase W are still in reserve, but which phase went into the resources right now?

Yeah, like to simplify it on you, the previous phase W is comprised of four sub-phases, W1, W2, W3, and W4. W1 and W2 is what we're mining now. For the next few years, we're mining W1 and 2. W3 is the one we paused, and that's in reserves and remains economic. And then W4 is the one that got moved from previously being phase W in reserves to now being in resource. The gold is in the ground, but it changes categories.

Okay, and that was the one where you would have had to do a major layback? Was that the reasoning and the capital required to do that?

Okay.

And the evaluation now is whether or not you want to go from underground on that one.

Is that what you're trying to say? I can expand a little bit more on that. You have W3, that's like I mentioned, it's in reserves, in open pit reserves, and that's a decision to start stripping that phase and investing the capital stripping. When it comes to W4, W4 actually, it would be nice to show you one day a cross-section, but W4 sits above phase X. That's the underground that we're starting to decline to go towards. So, yes, Now to go straight to your question. The bottom of W4, the higher grade material of the W4, has the potential to be combined with Phase X underground. Okay. But again, there's more engineering and drilling that needs to be conducted. As we go down, we're going to drill all this area from underground because now it's only drilled from surface. Then we can define better the underground resource and potentially have a chunk of W4 ounces moving into Phase X underground.

Okay, thank you. That was very clear. It's been a while since I've actually understood that, so that was a very good explanation. Thanks.

You're welcome. Our final question comes from Anya Skatukanik with Scotiabank.

Okay, good morning. I think that's me. Thank you for taking the question. ever been called Anya before, so that's a new one. And that's the easier part of my name, so yeah. Okay, so let's start with just a clarification, Paul. You mentioned, I'm just looking at my notes here, that you have opportunities for expansion in Nevada. Should I take that as, expansion in what you already own, i.e. all of these underground targets, Gold Hill, etc., or are you looking for other opportunities in Nevada to grow given the infrastructure of Ball Mountain is going to be available very shortly, the mine life is short there. So that's my first question.

Sure. It's what we already own and what we're getting at. I mean, the way I would think about starting with round is, number one, we're pretty confident that our underground opportunities will be stand-alone, economic. We're driving the decline, but we see the widths, we see the grades, and so, you know, first exercise is to satisfy ourselves that we could run those undergrounds as a stand-alone underground and they make sense. When we think about optionality or flexibility. It's really coming back to this business of turning back on the things we've just paused. I think we'll continue to study that through the year. I think it looks promising. I think we'll be in a better position to reevaluate that as we get to the middle of the year. turn back on the SW scenario in conjunction with the underground, it has almost a bit of a multiplier effect with the economics. So that's really what we're getting at when we talk about optionality. It's the flexing of the underground and the restarting of some of those laybacks. Again, I would also say there is some greenfield activity in Nevada. But, you know, and we just got one of our best holes ever in Nevada over at Bald, where we're seeing the oxide, you know, extend to depth with pretty attractive grades and widths. So, again, that may not happen on a timeline that provides for continuous production at Bald, but it's certainly very prospective.

Because I was going to ask, you know, sorry, the fate of Bald Mountain. I mean, does that look like it's a non-core asset now, but maybe with this expiration news, you're rethinking that?

Yeah, it's always a tough one. Look, I mean, for us, as we say, what constitutes core versus non-core is how does it compete for capital internally. And when you pull holes like that, it's... it's pretty, you know, it is pretty attractive and we'll want to understand it more. So we're not there yet, but it's a fair question.

Okay, and maybe just moving on to Curlew, just for my soft reminder, so this pre-feasibility that you're kicking off in April is going to take about a year to do. Is that about right?

Yeah, that's a fair estimate.

And then, so you'll do the pre-feasibility, you'll see with the additional drilling you have this year, how much more you can add to this. But just from, and I'm following up on another question, but just on the permitting side, can you remind me, is it just, do we have to reapply for permits to just reopen the mill and then permits to truck the ore to the mill? Or is it more substantial than that? I just forget.

Yeah, I think, you know, part of the pre-feasibility study, Tanya, would be to actually zoom in on that and answer that question. Our strategy, if you ask me today, is closer to what you just mentioned. So you're thinking close to our thinking. Basically, a restart of the mill and... dry stacking in terms of tailing, and then trucking of the ore from the mine to the mill. These are the main components.

Okay. And then I guess my final question, just to finish off the 2025, should we think of La Coypa running in that 250,000-ounce range production? For 2025?

Yeah.

I would say just over 200 in 2025 as we taper down what we currently know. But, of course, it will be an objective for us to try to maintain it flat from the 240 that we're having this year.

All right. And then I think we phase it out by 2026. Is that a fair comment?

It's a fair comment with the understanding that we're starting the work to have a look at the extensions to try to maintain that level there. pieces that Ned mentioned. We've done a lot of drilling. We've done a lot of the work. We're now entering some of the permitting phases for those extension pieces.

Okay, so really La Coypa and Bald are the two that we're facing, sort of phasing out in that sort of 26, 27 timeframe or thereabout before, unless we have extension and or other that is discovered.

We're looking to extend La Coypa, Tanya, with permitting on stuff we can see out towards the end of the decade. So that's more of a bald question. That's more the situation with bald than it is La Coypa.

Oh, okay. Okay. And for La Coypa, do you have that on property and permitted? It could be easily brought through?

It's, you know, it is permitting. And it's on our property. at an existing mine. So one would expect that makes it more straightforward, but we've still got to push it through the system.

All right, so you do need permits for it.

Yeah. Okay. The satellite pits is what we're permitting around an existing infrastructure. Okay.

Okay, no, great. Thank you so much for that. So I was just trying to follow up on Anita's on what mines are fading out in sort of the next couple of years.

Great. Thank you.

There are no further questions at that time. With that said, concludes today's conference. Thank you for attending today's presentation. You may now disconnect.

Thanks, everyone. See you hopefully in person in the coming weeks. Thank you.