Kinross Gold Corporation

Thank you for standing by and welcome to the Kinross Goal Third Quarter 2023 Results Conference Call and Webcast. I would now like to welcome Chris Lickenhelt, Vice President of Investor Relations to begin the call. Chris, over to you.

Thank you and good morning.

With us today we have Paul Rowlinson, President and CEO and from the Kinross Senior Leadership Team, Andrew Friborough, Claude Schemper, Will Dunford, and Chuck 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 two of this presentation, a news release dated November 8, 2023, the MD&A for the period ended September 3, 2023, 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. This morning, I'll provide an overview of our third quarter and update you on our ESG initiatives. I will then hand the call over to Andrea to discuss financial performance, Claude to highlight our operating performance, and Will to discuss our projects. Our operations continue to deliver strong performance in the third quarter, and we remain well positioned to meet our full-year guidance. Our focus on delivering on our targets continues to drive strong results. By the end of Q3, we had produced just over three quarters of our full year production at costs that are tracking in the lower half of our guidance range. Our business is performing well, and we generated strong cash flow. In the first nine months, we generated nearly $1.2 billion of operating cash flow. And after reinvesting in our operations and project pipeline, we generated over $400 million of free cash flow. With respect to our operations, in the third quarter, Tassius, Pericatu, and La Coypa all continued to deliver excellent results, accounting for approximately 70% of our production with an ASIC of just over $1,000 per ounce. Cassius had a record production quarter, producing 171,000 ounces, was once again our highest cash flow operation. Perica II also performed well in the third quarter and, as planned, had its highest production quarter of the year. The COIPA was once again our lowest cost operation and also generated strong cash flow. Switching to the U.S. Our operations performed well with production at each site higher than the prior quarter. Fort Knox had a strong production quarter while also making no modifications to accommodate the higher grade Manchur ore. We recently celebrated the commencement of mining activity in a groundbreaking ceremony with the local native village of Ketlin and the governor of Alaska. Mancho remains on budget and on schedule to begin contributing ore to Fort Knox in the second half of next year. At Round Mountain, work has progressed on several fronts. As outlined in our release, we are pleased to report that we have now approved Phase S, making the future at Round Mountain more clear. Our plan is to progress from the current phase W to phase S, which is the next phase of open pit mining. These two phases will take production at round until the end of the decade. In addition to phase S, we also see potential to add higher grade underground ore, first from phase X and later from Gold Hill. You'll hear more on this later from Will. At Great Bear, we continue to make strong progress in the third quarter. Resource definition drilling is ongoing with 11 rigs currently operating on site. We are seeing excellent results from our directional drilling program, which is allowing us to increase our underground resources more cost effectively. As I noted last quarter, we are expecting a meaningful increase to the LP underground resource as part of our year-end update. Additionally, directional drilling and other areas of mineralization are also showing promising signs of growth. In particular, at the hinge zone located adjacent to the main LP zone, a recent high-grade intercept returned 2.8 meters true width with grades of approximately 260 grams per ton at a vertical depth of 870 meters. At the Great Bear Project, we have both a provincial and federal permitting process. In the third quarter, we continue to progress studies and provincial permitting for the Advanced Exploration Decline, which is what we refer to as the AEX. With respect to the main project, we progress permitting with IAC, Impact Assessment Agency of Canada, on federal matters. We are continuing our work on environmental baseline studies applicable to the main project, as well as indigenous consultations. We also continue to advance technical studies, including engineering and field test work. We plan to provide an update on this work in the form of a preliminary economic assessment, or PEA, in the second half of next year. I'd like now to switch gears and highlight some of our latest work at ESG. In the third quarter, we advanced our ESG efforts across three main areas. Number one, we completed a comprehensive review of our community management system, leading to the development of a new social performance management system for implementation at all of our operations. Two, we advanced our natural capital strategy focused on land use, water management, biodiversity, air quality, waste management, and reclamation. And three, we continue to deliver on our climate strategy. Construction of our 34 megawatt solar facility at Tassius is nearly complete. For context, 34 megawatts of clean energy will reduce our carbon emissions by over a half a million tons over the current life of mine. This project is one of the key contributors to achieve our 2030 emissions reduction goal. So, to recap, with strong year-to-date performance, we are well positioned to meet our guidance. With our projects at Tassius and La Coypa complete, We look forward to these assets continuing to generate strong cash flows. Our financial position has strengthened as we have continued to repay debt. We continue to return capital through a competitive dividend, and we are advancing the next round of projects that will contribute to our future. With that, I will now turn the call over to Andrea.

Thanks, Paul. I'll discuss financial highlights from the quarter, provide an overview of our balance sheet and comment on our guidance and outlook. As Paul noted, our strong performance continued in the quarter with production on track for 2.1M ounces and costs tracking in the lower half of our guidance range. In Q3, we produced 585,000 ounces anchored by strong production from our two top tier assets, Tassius and Perica 2. continued solid performance at La Coypa, and increased production over the prior quarter at each of our U.S. sites. Gold sales of 571,000 ounces were slightly above production due to timing of sales. In Q3, our average realized gold price was $1,929 per ounce, in line with the average spot gold price. Cost of sales of $911 per ounce in Q3 was relatively stable with the prior quarter. Cost of sales at Tassias, Pericatu, and La Coyfa averaged $735 per ounce, once again underpinning strong performance and free cash flows. Margins were strong in Q3 at $1,018 per ounce sold. All unsustaining costs were $1,296 per ounce in Q3, which was in line with the prior quarter. Year-to-date cost sales of $931 per ounce were below the midpoint of our full-year cost guidance range. Costs are expected to increase in the fourth quarter, primarily due to lower expected grades at Perica 2 as a result of planned mine sequencing. For 2023 as a whole, We now expect to finish the year in the lower half of our guidance range, so below $970 per ounce. In Q3, our adjusted earnings per share was 12 cents and adjusted operating cash flow per share was 38 cents. Attributable CapEx in the third quarter was $272 million. We remain on track for our full year guidance, but we do expect to finish the year towards the top end of our range. free cash flow for the quarter with $123 million or $187 million excluding working capital changes, and over $400 million for the nine-month period. Turning to the balance sheet, our financial position remains strong in the third quarter as we continue to delever. We ended the quarter with $465 million in cash and approximately $2 billion of total liquidity. Our net debt declined during the quarter as we repaid $50 million of the $100 million outstanding on the revolving credit facility. Subsequent to quarter end, we repaid the remaining $50 million balance. Our 12-month net debt to EBITDA ratio continued to trend lower as we finished the quarter at 1.1 times. As mentioned, following the nine-month results and a good start to Q4, we're in a strong position to achieve our guidance. I'll now turn the call over to Claude to discuss our operations.

Thank you, Andrea. I would first like to begin by discussing the significant progress our team has made on our journey to a more progressive, people-centric health and safety philosophy in the last year. All our employees and business partners play a major role in shaping how we operate safely across our operations. Our homegrown safety excellence program stands out for its genuine bottom-up approach, leveraging the collective experience of employees to foster a culture of ownership, collaboration, and shared purpose. This has begun to influence how we operate, and safety excellence is an integral piece of our operational excellence approach. Now moving on to Q3 and our operations. As Paul said, we are well on track to meet our annual guidance. Our expansion projects at TASIEST and NUKOIPA are complete and all our mines are performing as planned. TASIEST delivered record quarterly production of 171,000 ounces at a cost of sales of $666 per ounce, benefiting from strong throughput, strong grades and recoveries as we continued mining in the higher grade section of West Branch 4. We remain on track to achieve our full year production guidance in the range of 610,000 ounces at a cost of sales of $680 per ounce. Construction at the solar power plant is nearly complete, and we are on plan for first power to the grid by year end. Installation of the photovoltaic panels, inverters, and transformer stations are now complete, and the battery system installation is well progressed. Electrical works and the completion of the grid connection are continuing with pre-commissioning testing underway. Paraka 2 had a strong quarter, producing 172,000 ounces at a cost of sales of $845 per ounce. As indicated, fourth quarter production at Paraka 2 is expected to be lower and costs slightly higher due to the location of mining in the pit. We remain on track to achieve our full year production guidance in the range of 590,000 ounces at a cost of sales of $890 per ounce. At La Coypa, strong operating performance continued during Q3, driven by strong grades and recoveries. La Coypa was the lowest cost mine in our portfolio in Q3, producing 66,000 ounces at a cost of sales of $629 per ounce and contributing strong free cash flow. We remain on track to meet our full year production guidance in the range of 240,000 ounces and costs are tracking below our guidance. Now moving to the U.S. operations. Production improved over the prior quarter at each of our sites while costs remain in line. We remain on track to achieve our full year guidance range of 670,000 ounces at a cost of sales of $1,370 per ounce. Beginning with the Fort Knox operations, Q3 production of approximately 72,000 ounces was slightly higher quarter over quarter. At Manchot, activities remain on schedule and on budget, and we are on track for initial production in the second half of next year. Construction is now 90% complete, with commissioning activities well underway, as well as the preparation to transition the project to operations. Construction on the mill modifications at Fort Knox to process match of ore is progressing on plan with all the concrete works now completed. And work now progressing primarily inside the mill on tanks and piping components. Further work is scheduled to take place over the next several months per plan ahead of production in the second half of next year. At Bald Mountain, production of approximately 41,000 ounces improved over the prior quarter as a result of higher heap leach stacking rates, as all mining activity ramped up considerably against the second quarter. At Round Mountain, production of approximately 64,000 ounces was higher over the prior quarter, with the milling of high-grade ore from Phase W2. Costs at Round Mountain were better than initially planned due to favorable grades, stacking rates, and the timing of the leach inventory. With that, I will now pass the call over to Will.

Thanks, Claude. I'll start by discussing Round Mountain and then provide updates at Curlew and Great Bear. As Paul mentioned, we have approved moving forward with mining at Phase S, securing meaningful production scale at Round Mountain through the end of the decade. As you will recall, we made the decision at the end of last year to defer the mining of Phase S, given our focus on ensuring strong economic margins and returns on our capital investments. Since that time, we've been working on optimizing the design and are pleased with the outcome of that work, which has yielded a lower strip, higher grade, and significantly lower capex plan. This was achieved by stepping in the pit design, removing higher strip, lower margin ounces, and by identifying opportunities to add some near surface lower strip ounces earlier in the mine sequence to offset our stripping costs. This optimized design has yielded a high return, resilient opportunity with a significantly lower capex that can now be funded by production at Round Mountain over the next two years and provide a bridge to our future underground opportunities. To provide clarity around our mine plan sequence at Round Mountain, we are mining W2 now and we'll see similar production next year before W2 starts to taper off and phase F starts to ramp up in 2025. By 2026, we will be at full production in Phase S and will continue to produce through the end of the decade. We anticipate adding approximately 750,000 ounces of total production from Phase S. The combination of W2 and Phase S are expected to average production of 215,000 ounces annually over the 24 to 28 time frame. As we continue to mine these open pit phases, we are focused on exploring and studying our higher-grade, potentially higher-margin underground opportunities at Phase X and Gold Hill. We see potential for Phase X to come online in late 26 or early 27 and Gold Hill to come online towards the end of the decade. The exploration decline at Phase X is progressing well with approximately 1,000 meters developed to date, keeping us well on track to start definition drilling early next year. At Gold Hill, we will continue drilling in Q4 of this year and into next year. Moving to Curlew in Washington State, in Q3 we intersected a new vein zone as we continue to follow the interpreted paleo surface to depth. You can see this intersection on the slide, hole 1168, which returned 14 meters at 16 and a half grams per ton. While it is only one hole, this intercept is both wider and higher grade than our existing resource. which we can see on the slide higher up to the left. Existing resource averages just over six grams per ton and is generally narrow vein, offering potential to add production to our portfolio later in the decade. Exploration next year will focus on the wider and more continuous areas in our existing resource and will follow up on the new zone of higher grade mineralization that we recently intersected. Moving on to Great Bear, in Q3, we moved one of our six directional rigs across from LP to the hinge zone, which, as Paul indicated, results in the highest grade intercept we have seen since acquiring the property, showing approximately 260 grams per ton at a mineable width of 2.8 meters. The hinge zone, which is classic Red Lake style mineralization, is approximately 700 meters away from the LP zone, and we expect to be able to easily access it from our exploration decline, which will be located midway between the two. This high-grade intercept at approximately 870 meters vertical depth is about 600 meters below our inferred resource. Along with other drill results, this confirms our view that the hinge zone could provide additional high-grade ore to supplement the LP zone. In addition to the high-grade intercept at hinge, you can see on the slide our latest intercepts at the LP zone, where the other drill rigs have been primarily focused. directional drilling has increased the density of our intercepts at depth, allowing us to target a meaningful addition to the underground resource. We continue to see wide, high-grade mineralization reinforcing our thesis that this system continues at depth and provides potential for a high-productivity, long-life mine.

We will be updating our resource estimate on the back of this drilling in our year-end update in February.

In addition to the drilling campaign, we are advancing in two key areas at Greyfair. The AEX decline, through which we will be able to complete definition drilling at depth and bulk sampling, and the main project, which includes the mine, mill, and related infrastructure required for production. For the AEX decline, feasibility level design and engineering is now complete. You can see the surface design for AEX here on the slide. Provincial permitting is on track, and procurement for long lead items such as the camp, our infrastructure, and water treatment is underway. Surface construction is planned for the second half of next year. For the main project, design and engineering is well underway. Baseline studies and field work campaigns are also progressing well. Notably, we have progressed an extensive test work program of soil and overburden geotechnical conditions to provide increased certainty as we progress the design of our project infrastructure. The recent bedrock geotechnical drilling has also continued to demonstrate competent ground and favorable rock characteristics for both the open pit and underground. Permitting work at the main project is ongoing. We expect to release a PEA in the second half of next year. In summary, we are excited by the continued success of our drilling campaign and by the progress we are making to bring this cornerstone project into production. I'll now turn it back to

Thanks, Will. In closing, we have delivered a strong third quarter and first nine months. We are well on track to meet our annual guidance. Looking forward, we are excited about our future. We have a strong production profile. We are generating significant cash flow. We have an investment-grade balance sheet. We have an attractive dividend. We have an exciting pipeline of opportunities, and we are very proud of our commitment to responsible mining that has made us a leader in ESG performance within the industry. With that, operator, I'd like to open up the line for questions.

At this time, I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile any questions. Again, if you'd like to ask a question, please press star one on your telephone keypad now. Our first question comes from the line of Ralph Profity with eight capital. Please go ahead.

Thanks very much, operator. Good morning, Paul. I'd just like to ask your team to elaborate a little bit on the stepping in of the pit design at Round Mountain to access and bring down that strip ratio. Just wondering, is this a result of increased confidence in some of the slope characteristics? And maybe can you just describe the work that's being done in that area and potentially would be useful to have what impact that had on the overall strip ratio?

Sure, Ralph. Good morning. Thanks for the question. Yeah, look, the team has been heads down and done some really good optimization work in the last several months and has come up with a really robust outcome. And I'll let Will speak in a little bit more technical detail to what we did, what we're thinking differently.

Yeah, so we have done a lot of work on geotech in terms of just increasing our confidence, but we haven't changed the slope parameters that we're using. So the overall slope angle is still similar to the old phase S. Really what it was, as you can see in the diagram on the slide, is just stepping in the back of it in areas where the strip ratio and the grade resulted in the lowest margin kind of increment of that pit. And at the same time, we managed to identify through drilling and some work by the technical teams, some opportunities to bring in some lower strip ratio material. So that took our total strip ratio down from about 2.3 to 2.1 that you see in the press

Gotcha, okay, that's helpful. Yeah, thanks again. If I could switch to directional drilling at great there. Are you looking at going deeper and extending both the vertical and horizontal reach of that? And maybe you can elaborate a little bit more on where specifically you're targeting the areas for directional and perhaps what also are the targeted depths?

Sure.

Yeah, look, I mean, obviously the transition here, directional drilling has worked great for us in part due to the competency of the rock. Not all material holds up to directional drilling. It's working really well for us here. And as we've said, we're, you know, it's become very cost effective in a way to increase density underground. But there are limits. And part of the transition here is to is why we're looking to get that decline started and do more drilling underground as we get the decline advanced.

Yeah, so we have five rigs right now that are really focused on what we're overall calling the LP zone. So that's Yumo, Yarrow, Barrow, kind of the key part of the ore body that we've drilled off. So five out of the six directional drill rigs are primarily focusing between 500 and 1,000 meters there where we're building out our resource. We are obviously, as you've seen in some of the drill highlights, we are doing some deeper drilling as well just to prove the pieces. But we're really focused on that 500 to 1,000 meter because that's kind of the next decade of the of the mine plan and we want to understand that as we design our infrastructure we did as we noted in the press release take one rig in this quarter and take it across to the hinge area that's the higher grade grade red lake style mineralization and we've used that rig to drill out deeper as well there and we're going to be trying to build out some resources there sufficiently does that give you a good picture

Excellent answers. Thanks very much.

Our next question comes from the line of Anita Sawney with CIBC World Markets. Please go ahead.

Hi. Good morning, guys. Thanks for taking my question. So, I'm going to focus on the Round Mountain Phase S, and I see you've got a presentation or a slide 19 that gives a little bit more color on the production profile. Could you break out for me? Because I went back to the reserves and resources last night and I couldn't really figure out exactly what was happening there. But what is the grades and tons for Phase S and what's the grade and ton left at W-2? You can do it as of 2022 year end if that's useful. As of 2022 year end? Well, I'm assuming, I mean, the one that you've got public, right? I just need the breakout of the public resources.

Oh, in terms of what's in Phase S, I believe it's around 800,000 ounces. Yeah, so we've got around I8, I believe, is what it is in the Phase S resource, close to 9.

We can follow up with the exact rate.

And the grade?

grade of phase us in uh the resource well the reserve ideally because you said you put it in reserves right as of year end 2022. yeah i think it was in that uh close to 0.6 gram per ton range but we'll follow up with the exact mixture of uh mill and leach yeah i'll break that out but probably the one on the mill and Closer to 0.4 on the leach, but in that fall part.

Yeah, it's sort of a 0.8. Yeah, exactly. But we can follow up with what was in last year's reserve.

Yeah, definitely follow up because that was more confusing than that answer was. So I didn't, wasn't clear. So 0.8 on the mill and 0.4 on the leach, is that what it is? In the reserve?

The current grades For the mill, let's say the S is 0.8 and the leach is 0.5. But we'll follow up on exactly what it was in the reserve last year because obviously our current design is slightly different than that reserve.

Yeah. What I'm really trying to drive at is how much of phase W is left and what do we – like when you're showing us the incremental, I just need to know what the numbers are for the actual – We'll have a look. Yeah. Yeah.

We'll have about 150,000 ounces left at the beginning of next year in Phase W. That's in the ground, but obviously ending our final reserve update this year. There's also W3, which is still in reserve, which is a significant number of ounces. And overall, the site itself, excluding Phase S, just W and the leach inventory and some other cleanup areas is about 400,000 ounces. So we've got, if you're just looking at kind of phase W, plus the remaining leech tail, et cetera, that's about 400. About 150 of that is still in the ground at end of year. And then you've got an additional 750 coming on from what we've just released regarding phase S. You've still got somewhere around 800, but final reserve will confirm in phase W3.

Okay, so I think probably take it offline, but could you tell us what the capex spend over 2024, 2025? Like you've given us the overall lump sum, but mentioned that there's a deferral of capital that basically allowed this to be approved. So I'm just wondering what the cadence of the 140 million or 170 million is.

Like how it's broken down, are you asking?

Yeah, every year. How much are you spending on Phase S?

Yeah, we're spending $125,000 next year on Phase S in terms of capital. That's about $115,000 of initial capital and another $10,000 of sustaining. And then in 2025, we'll be spending $60 million in capital.

I'll just add, Anita, that these numbers are sort of within the kind of billion-dollar range of capital we've been talking about in our total 2024.

Yeah, I mean, I took a stab at it last night to try to add this, but key pieces of information were missing, so I sort of, I need those pieces to be able to give you the credit for it. So, and then moving to Great Bear, could you remind me, you know, with the overall results that you've just delineated there? You said you're expecting an increase in reserves at the LP fault. Could you give us sort of a ballpark figure on what you think that you could be able to add with these results?

Oh, we've said, and we said it on the last call, you know, as the directional drilling increases the density, we are expecting to increase our resources at depth in the LP zone and we'll give an update at the end of the year. I think we kind of notionally directed towards at least 500,000 ounces, but as the work continues, the density of drilling continues. As you can see from the results, as we tighten up that drilling, that'll help support that increase in the underground resource.

Okay, thank you. Thanks for taking my questions.

Our next question comes from the line of Kerry McCrury with Canaccord Genuity. Please go ahead.

Hi, good morning, guys. I'm just wondering if you could, it's good to see the uptick at throughput at TAS, yes, and the core class. Just wondering how those ramp-ups are going into Q4 and what sort of run rates you're seeing now.

Yeah, so Kerry,

At TASIEST, you've seen the increase throughput. We're focused on maintaining the deliverable towards the end of the year with our progress towards 24,000 into the new year and full year for next year. At La Coypa, we've steadily been improving both staffing rates and milling rates in the filtration piece, and October was a really good month for us. at an average of over 13,000 tons a day. So we're, as Paul alluded to, we consider now both TASIUS and the COIPA projects complete as those mines now sustain their throughputs and build their mine plan around what's feasible for a particular time of the year.

So with TASIUS, should we be assuming something in the, you know, 21, 22 range for Q4?

Absolutely.

Okay, great. And maybe just on the 2021 guidance, you're tracking kind of above the 2.1 million ounce mark. Just wondering if you could just – how should we think about Q4 in terms of, like, which assets are going to come off of it and which ones are going to be stronger? Any guidance that would be helpful?

Yeah, Kerry, it's Paul here. Yeah, good question. I mean, look, we – We're just reiterating our guidance here. We're solidly on track for guidance. Certainly as it relates to production, probably going to be a little lower, probably in the lower half on COPS and maybe in the upper half on CAPEX. But our intention is to land on 2.1 as guided for the year.

Terry, if I might add, just, we did note in the call that, you know, Baraka 2 will be slightly down in the fourth quarter because where we are, we expect Thasias to be on track. Port Knox will be on track. And Round Mountain will also be a little bit down due to, as we head into the, you know, stacking in the winter now.

All right, great. Thank you very much.

Our next question comes from the line of Josh Wolfson with RBC Capital Markets. Please go ahead.

Thanks very much. I had a question regarding the implications of Phase S for Round Mountain and I guess what it would mean for the existing three-year guidance that was issued. I guess part of it was addressed. I just want to maybe clarify a couple of things. On the production, there's been a number provided on average for a four or five-year period. I'm just wondering, is that production reasonable to expect over the next two years outstanding for the three-year guidance? And then just going back to the capital, given that capital is tracking high this year, inflation is still present, and then the new CapEx, are we still comfortable with that $1 billion target. I think there was this comment beforehand that suggested that. Thank you.

Yeah, you can see on slide 19, we've given a bit of a guidance as to where the production moves. with Phase S included into the plan. So you can see that there isn't a significant, within the three-year guidance period we've provided, there's not a significant contribution yet from Phase S and not one that moves the needle enough that we're changing guidance today. And you can also see that there's a bit of a depth. So the 215 over the four year period that we gave, obviously it's slightly variable. You can see next year we're planning to be similar production scale to this year and then dipping down in 2025 as we continue to pull off the leeches and finish up at W.

On the CapEx guidance, I did allude to that in an earlier comment that we still expect to be somewhere around the billion-dollar range in 2024, but I just caveat that by saying we're just in our budget process now, but we should be in a billion-dollar neighborhood.

Good. Okay. And then for Manchot, just sort of addressing some of these media reports and legal items, is there any sort of timeframe we can expect to receive an update there?

I think nothing more than what we've said, really, Josh. I mean, everything's on budget, on track. As we said in our remarks, we actually had a a groundbreaking ceremony with the local community, the governor of the state. Everything's in good shape and moving ahead.

Okay. That's good to hear. Thank you very much. Thanks.

Our next question comes from a line from Tanya Jackinsontnick with Scotiabank. Please go ahead.

Good morning, everybody. That's me, I think. So I just have a few questions, if I could, just some follow-up. I'm going to start just on Round Mountain. Again, this phase asks when, and I appreciate you giving us the slide 19 to show us the production profile, but maybe from a high level when you said lower strip and You know, that's going to help on the cost side, maybe directionally from a high level. What improvements have you seen on cost? Is it 10%, 20%? Just directionally so we have an idea, you know, as best as we can with the information.

Yeah, it reduced about a third of our strips. So it reduced about $80 million worth of kind of upfront CapEx cost as compared to what we were considering last year. And you can see in the table that what we see is the go-forward CapEx and some of what I outlined for Anita.

Okay.

So that is down, the CapEx is roughly down a third. You can see where it's at now.

Yeah, yeah. No, I was just more focused on the operating costs, but yeah, I saw the CapEx.

On cash costs, Tanya, we are expecting cash costs for 24 to be similar to this year, and 25, and then phase S will help lower those costs.

Yeah.

Okay. When you say, Andrea, 2024 similar, are you meaning similar overall company? in in 24 to 23 and then are you just saying 2025 overall or is it just around mountain i was referring Yeah, right now. Okay, perfect.

And the really positive thing, Tanya, is with that lower capex and the change in the strip ratio, although the cash cost will be staying similar over the next couple years, there's actually enough free cash flow coming out of Phase W, even at B1850, that we kind of run our analysis out for this to fund the pre-strip of Phase S, to fund that $125,000 next year and $60,000 the following year. Okay.

Thanks. And then my second question actually has to do with the great bear and curlew. So just looking at great bear and just looking at the longitudinal and seeing that, you know, this drilling continues to go deeper and the grade continues to improve. And I appreciate, Paul, you said that. But in the last conference, Paul, we said, you know, between half a million and a million ounces added to the resource for the underground. I'm just wondering if, you know, because this grade is appearing to be better, obviously, you know, better grade is going to help this resource number. Are you thinking that we are going to be toward the upper end of that range?

No, I think Daniel will stick with the highly confident on 500, and I'm expecting we'll do better, but I don't really want to speculate at this point. I think what's clear to me here is this directional drilling is really filling in the panel. And what we've got here is a really attractive open pit, high-grade open pit, which will have great cash flow. And now the underground, as was our thesis, is filling in quite nicely. So we can kind of see phase one of the mine followed by the underground. We're now starting to show that the Hange-Lim Red Lake style mineralization continues at depth, so we'll have a high-grade feed. It's all coming together really well. But the point I think we were trying to make is, you know, the efficiency is great, but there comes a point where I'm not sure it makes a lot of sense to keep punching down below one kilometer. Everything is going full speed ahead with the decline. As we said, we expect to begin early works next year. And once we get the decline down, we'll do more definition drilling from there as opposed to from surface.

Yeah, now that makes sense. And maybe just has your thought process changed? You're getting a lot of visible gold I see there. in the slide 21 just changed at all on the capping factor that you're going to be using? Has that changed at all? And just remind me how you've been thinking about these high-grade, you know, results and sort of what are we capping?

Yeah, I think your observation, we are seeing a lot of visible goals. My expectation is that That'll ultimately drive a positive reconciliation, but it's a Hollywood problem.

Absolutely. 260 grand for 10. Okay, maybe my last question, just if I could move on to Curlew. Can you just remind me what's our expectations? You got another good drill results, again, higher grade than what you have in the overall resources. Can you just remind me what we're expecting for year-end 2023 when you report your results in February?

Yeah, we are expecting to see an increase in our resource. Obviously, that's going to come out fairly shortly, but we're hoping to be in that overall between inferred and indicated to be around that million-ounce mark, maybe a little bit higher. But obviously, February is where the work will come to fruition and give you a firm number. of the increases that we've seen there. Obviously, that new drill hole, we're not expecting to have a resource around that by year end. That's one hole at the bottom of the paleo surface there. So that's going to take follow-up work at the end of this year and into next year before we can pull that into a resource.

Okay, that's what I was trying to understand, whether that could be pulled in. Okay, so that one's not pulled in, but you're expecting an overall increase in the resource from the other lower-grade holes that you have that line up.

Yeah, we are. We've had some other good intercepts higher up in the area of our resource, particularly around K5, which you can see on the page in the press release, where we kind of have some of our better mineralization in the existing resource. So, we do expect a positive update on the resource there.

Okay. Okay. Thank you so much. I'll leave it to someone else to ask questions. Appreciate you answering my questions. Thanks, Daniel.

Our next question comes from the line of Mike Parkin with National Bank. Please go ahead.

Thanks, guys, and congrats on the solid quarter. Most of my questions have been answered. Just wondering, the Phase S, having to build another pad, are you fully permitted for all that, or is there any kind of permitting to kind of get completed to further de-risk that optimized Phase S?

No, we already have our federal permits for Phase S. There's no significant permitting that's required. The small expansion on our existing N-DED pad, that was already planned as part of the old Phase W work, so no hurdles in the way there.

And then, just following up on Tammy's question on Curlew, you're targeting to be over a million ounces of total resource. ultimately is there an internal goal that you can share with us in terms of scale of a resource that would you know kind of hit a level where you might see the pulling of the trigger of a restart or is it just kind of too early and we'll just have to wait for as these additional results continue to build the resource i mean i think as you've seen with our uh

with what's progressed at Phase S, even just as an example over the last year and our focus on the underground at Phase X, we're really focused on margins as a company and making sure we have a strong return on our investments. So it's not necessarily just a total ounces number. It is, you know, there's a lot of opportunity along that paleo surface. It's really about making sure that we can make money on the width and the grade that we're coming through with the resource and we get the right around the mine design and optimizing the cash flow on an annual basis that we can get out of it. There's no doubt there's long-term potential from a resource perspective, but we need to make it cash flow.

And have the results proven any kind of comment in terms of management expectations? Are you finding the drill results are proving in line a little better than what you kind of thought when you've been expanding these zones?

Yeah, I mean, obviously our drilling is targeted to expand in the better areas. That's really what we focused on this year. And we have seen some extensions in K5, but it's quite early. Just to wrap it up, I think we do need to follow up on some of these really, really strong grades and wins. But we need to continue to do our work and we'll have more information, I think, next year as we complete our PFS.

The key point here, our thesis was tracing that paleo line. And that's gone very well. We had a thesis that the mineralization would basically follow that paleo line, and it has. We're getting good results. This last spectacular result was ironically the last call of the drill campaign this season. That's a good way to end the program. Very exciting, but we've got more work to do.

Okay.

Looking forward to more results from there.

Thanks, Scott.

There are no further questions at this time. I would now like to turn the call over to Paul Brolinson for closing remarks.

Thank you, Operator. Thanks everyone for joining us this morning. I understand it might be a busy morning out there so appreciate your time and your questions and we look forward to catching up with you in person in the coming weeks. Thank you.

I'd like to thank our speakers for today's presentation and thank you all for joining us. This now concludes today's call and you may now disconnect.