Kinross Gold Corporation

Thank you for standing by. My name is Jael and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2024 results conference call and webcast. Online has 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, press star one again. I would now like to turn the conference over to Chris Lichtenheld, Vice President of Investor Relations. You may begin.

Thank you and good morning. With us today, we have Paul Rawlinson, CEO, and from the Kinross Senior Leadership Team, Andrea Freeborough, Claude Schimper, Will Dunford, 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 two of this presentation. Our news release dated July 31, 2024, The MD&A for the period ended June 30, 2024, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

Thanks, Chris, and thank you all for joining us. This morning, I will discuss our Q2 margins and cash flow, provide high-level updates on our operations and projects, update you on our sustainability initiatives, and reaffirm our outlook. I will then hand the call over to Andrea, Claude, and Will to provide more detail. Following a strong start to the year in Q1, we delivered another strong quarter in Q2, establishing an excellent first half and positioning as well to meet our four-year guidance. In Q2, our operating margins grew by over 20% compared to the prior quarter. once again outpacing the relative increase in the gold price over the same period. As a result, free cash flow more than doubled in the second quarter to $346 million, the first half total of just under a half a billion dollars. Turning now to operations. Our production in the second quarter was on plan, delivering 535,000 ounces at a cost of sales of just over $1,000 per ounce. Our two largest assets, Tassius and Perica 2, both performed well with production costs improving over the prior quarter. Tassius had an excellent quarter and was once again the highest margin mine in our portfolio, driving significant free cash flow. Erica 2 continued its consistent contribution with strong throughput and recoveries, helping drive a steady quarter of production and cash flow. At La Coypa, production remains on track for the full year, and we continue to use strong mill grades and recoveries to optimize throughput in order to address some maintenance opportunities. At our U.S. operations, Production was on plan with notably stronger performance from Fort Knox. Turning now to our development activities in the second quarter. At Round Mountain, the Phase S open pit and the Phase X underground development work continues to advance well. Stripping at Phase S and the expansion of the heat bleach pad are progressing on schedule to support initial open pit production next year. At phase X, the development of the exploration decline is progressing on plan. As outlined in our press release, we are excited that the extension drilling at phase X intersected mineralization with strong grades and widths outside of the primary exploration target. These results demonstrate the potential for expansion of the primary resource target and are expected to support high productivity bulk mining. Moving to Alaska, consistent with our guidance, I was recently at Fort Knox to celebrate the first cold war from Manchot. This important milestone represents the hard work and dedication of our project team and partners to bring this high-grade mine into production both on budget and on schedule. Mining operations at Mancho are performing as planned, and the Fort Knox mill modifications are on track for final commissioning in Q3. As a result, we look forward to delivering several years of strong production at attractive costs from the combined operations in Alaska. At Great Bear, we continue to make strong progress in the second quarter. The ongoing exploration drilling campaign continues to focus on targeted extensions of the resource at depth. And in Q2, we drilled the deepest hole on the property to date. This hole intersected attractive grades and widths at a vertical depth of nearly 1.6 kilometers down plunge of the main LP zone. This intercept is outside of our current resource and demonstrates significant potential for further resource growth. Drilling at hinge and limb also returned attractive results for depth extensions at both zones, indicating strong upside potential to supplement the main LP zone from these satellites. It's important to note that this recent deep drilling will not be reflected in the upcoming PEA because the PEA is a point-in-time estimate and will only include drilling up to April. The PEA will provide visibility on the open pit and a window into the initial production scale cost and margins for the underground. Given the depth of the mineralization, the long-term potential of the resource will need to be drilled off from underground as we progress development ahead of mining. However, this deep drilling today shows the continuation of high-grade mineralization beyond the current resource in the PEA, indicating the potential for significant resource growth over time. We look forward to outlining more project details when we release the PEA in September. For the AEX, the start of surface construction is targeted for later this year. Regarding permitting for the main project, the federal impact assessment is underway. Baseline studies, permitting, and engineering for both the AEX and main project are all progressing well. In summary, we are very pleased with how things are progressing at Great Bear. Before I make a few comments on sustainability, we would be remiss to not address the recent incidents that have occurred around heap leach facilities within the mining industry. Will is going to discuss why we are confident in the quality of our heaps in more detail later on this call. Turning now to sustainability. Last night, we published our fourth annual climate report, which provides our latest comprehensive climate related disclosures. The report also outlines our progress towards our climate-related goals and provides details on our climate change strategy, including our plan to reduce greenhouse gas emission intensity. In 2023, we implemented 15 energy efficiency projects across our sites with combined greenhouse gas reductions of more than 29 kilotons of CO2. As a result, our percentage of renewable energy increased 23% of total energy consumed last year. Looking forward, we are on track to achieve our targeted 30% reduction in Scope 1 and Scope 2 emission intensity by 2030. In summary, we continue to be very proud of our work in the area of sustainability, and I encourage everyone to read our recent climate report to learn more. Turning now to our outlook, year to date, we have produced over 1 million ounces at a cost of sales in line with our guidance. Looking ahead, we remain on track to achieve our production and cost guidance for the full year. Our continued focus on costs is driving strong margins and significant free cash flow. With that, I will now turn the call over to Andrea.

Thanks, Paul. This morning, I'll review our financial highlights from the quarter, provide an overview of our balance sheet, and comment on our guidance and outlook. Our second quarter performance was strong with production and cash flow exceeding the prior quarter. We produced 535,000 ounces with gold sales of 521,000 ounces. Cost of sales was $1,029 per ounce. And with an average realized bull price of $2,342 per ounce, we delivered strong margins of over $1,300 per ounce. All in sustaining costs was $1,387 per ounce. First half cost of sales of $1,006 per ounce is in line with our full year cost guidance range of $1,020 per ounce. First half all in sustaining costs $1,348 per ounce is also in line with our full year guidance range of $1,360 per ounce. In Q2, our adjusted earnings were 14 cents per share, and adjusted operating cash flow was $478 million, both improving over the prior quarter. We generated $346 million of attributable free cash flow in the quarter, or $237 million including working capital changes. Turning to the balance sheet, our financial position continued to improve in the second quarter and remained strong. After repaying $200 million of debt against the term loan in Q2, we ended the quarter with $480 million. We currently have approximately $2.1 billion of total liquidity. Over the past 12 months, we've reduced our net debt by approximately $450 million, and our net debt to EBITDA from 1.3 times last year to just under 0.8 times as of Q2. Looking forward, we plan to continue allocating excess free cash generated against the remaining $800 million due on the term loan in 2025. Turning to our guidance, Following Q2, we remain solidly on track to meet our guidance to produce 2.1 million ounces at a cost of sales of $1,020 per ounce and all in sustaining costs of $1,360 per ounce. Capital expenditures are on track for our full year guidance of 1.05 billion split roughly evenly between sustaining and non-sustaining capital. I'll now turn the call over to Claude.

Thank you, Andrea. In 2023, we launched our global safety excellence program. I'm pleased to say that we have now shared this program with over 60% of the workforce, including both employees and business partners. We are proud of the program's impact today and look forward to continuing to share it with the rest of the organization. This quarter, we remain focused on continuing to implement our human and organizational performance program and our operational learning teams. This program is improving our team collaboration and operationalizing of putting people first core value. Results today are very positive, and it will continue to be a focus through the remainder of 2024. Moving on to our operations, we saw continued strong performance in Q2, with our mines delivering as planned in the quarter and the first half of the year. At TASIUS, production of 162,000 ounces was higher quarter over quarter. the cost of sales of $656 per ounce, improving over the prior quarter. Stasius was once again the lowest cost asset within the portfolio, driving significant free cash flow. Following a strong first half, Stasius remains on track to meet its full year production guidance of 610,000 ounces. At Parakeet 2, production of 130,000 ounces and a cost of sales of $1,039 per ounce were on plan and also improved over the prior quarter. mine continues to see steady performance on throughput grades and recoveries in line with the mine plan mine sequencing continues to transition through the lower grade portions of the pit as planned before moving back into the higher grades by year end into 2025. character 2 remains on track to meet its 2024 production guidance of 510 000 ounces at the cooper Due to production of 66,000 ounces was lower over the prior quarter, whilst cost of sales was higher mainly due to higher mill maintenance costs and timing of sales. Production at La Cueco remains on track for the full year target of 250,000 ounces. A strong performance on graze and recoveries offset lower throughput. We continue to perform reliability and optimization work on the plant. As part of this work, the team is actively managing throughput levels to enhance the reliability of the plant while the plant optimization continues. Moving to our U.S. operations, production was higher quarter over quarter, benefiting from improved contributions from Fort Knox, while Round Mountain and Bald Mountain were lower as planned due to mine sequencing. Beginning with Fort Knox, production of 70,000 ounces was significantly higher compared to the prior quarter, as mold throughput, deep dish performance, grades and recoveries all improved. Cost of sales of $1,345 per ounce was lower over the prior quarter, primarily due to the higher production. At Manchot, mining continues on schedule and ore transportation has ramped up to planned volumes. Processing of Manchot ore began in early July and is tracking to plan. The full commissioning of the Fort Knox Mill modifications is expected to be completed in Q3. At Bald Mountain, production of 46,000 ounces was slightly lower than the prior quarter as planned. Cost of sales of $1,271 per ounce was higher quarter over quarter. At Round Mountain, production of 62,000 ounces was lower over the prior quarter due to lower mill throughput and grades as planned. The cost of sales of $1,564 per ounce was higher quarter over quarter due to the lower production. At Phase S, mining activity continues to progress as planned. Meanwhile, the heap leach pad expansion is progressing on schedule, earthworks and procurements are all complete, and initial production from Phase S remains on track to beginning the second half of next year. With that, I'll now post the call over to William.

Thanks, Claude. I'll start out by providing a brief overview of our operating heap leach facilities before moving on to an update on our projects. We are currently operating heap leach facilities across three sites in the US. As Paul mentioned, we are confident in the quality and safety of our heap leach facilities for a few reasons. First off, our facilities are primarily run of mine heap leach pads, meaning they have larger rocks and crushed heap leach pads, which significantly reduces the risk of liquefaction and increases the structural stability of the pads. The only heap leach we have with crushing is Round Mountain, where we are only crushing a portion of the ore we are placing on the pads. So overall, still have larger rock sizing than a fully crushed pad. Second, topography. Both Round and Bald Mountain are built on relatively level ground rather than hillsides or valley fills, increasing their stability. Fort Knox is our only valley fill to keep leach operation, and again, the two pads there are 100% run-of-mine ore. Finally, it is also worth noting that the embankments at the toe of the valley paths of Fort Knox are designed, engineered, operated, and monitored as dams based on state regulation in Alaska, which ensures strong governance on construction and stability. So overall, we are confident in the quality of our heat bleach facilities, and as always, we will maintain the safety and environmental impact of these facilities as our top priority. Moving to updates at Round Mountain. At Phase X underground, the development of the exploration decline continues to progress well, with over 2.2 kilometers developed so far. Exploration drilling has also progressed well, as we have started infill drilling of the primary Phase X target and continued opportunity drilling outside of the target to extend the mineralization. As you can see on Figure 1 on the top of this slide, we have received multiple strong assay results on intercepts outside of the Phase X target. A particular note, you can see in the bottom of Figure 2 an impressive intercept of approximately 30 grams per ton over 32 meters above the lower portion of our primary exploration target, shown in purple. There is also a link to a video on the slide and our press release that can give you a better sense of the location of these intercepts. We are pleased to see these results and confirmation of the potential to extend the mineralization that we are targeting for underground mining. We will continue our exploration program at Phase X through the remainder of this year and into next as we advance technical studies in parallel. Moving to Curlew Basin, exploration continued to advance in the second quarter. Results from the underground drill program continue to confirm thicker zones of high-grade mineralization near the stealth zone, where a recent assay returned approximately 14 grams per ton over 19 meters. Drilling from both surface and underground also continued on the roadrunner vein zone, with a recent hole returning 12.5 grams per ton over 2.4 meters. We are encouraged by these higher-grade results, which indicate potential to expand the resource and improve the overall resource quality. At Crate Bear, drilling continues to focus on demonstrating that high-grade mineralization continues well beyond our current resource. As Paul mentioned, in Q2, we drilled the deepest hole on the property to date. This hole returned 3.8 meters at a grade of 9.5 grams per ton at nearly 1.6 kilometers vertical depth, demonstrating the impressive continuity of this system that will ultimately need to be drilled out from underground. Drilling in the second quarter also showed good grades and widths at depths well beyond our current resource at the Discovery, Yarrow, and Arrow zones, as can be seen on this slide. Similar to Yuma, these zones continue to show potential for significant resource upside and growth at depth. Lastly, drilling at hinge and limb this quarter has returned promising results for depth extensions at both zones. At hinge, we had multiple strong intercepts at around 850 meters, including 9.3 grams per ton over 3.1 meters and 22.7 grams per ton over 3.1 meters. We are excited to be seeing confirmation of depth extensions to mineralization across the board at Grave Bear, continuing to support our original thesis of a long life, high grade mining company. Moving to a few other updates at Great Bear. For the AEX decline, detailed engineering, execution planning and procurement continue to progress well. We are targeting a start of early works later this year and start of the underground decline in mid 2025. For the main project, in Q2, we continue to advance technical studies, fieldwork and comprehensive baseline studies. Beyond the strong exploration results, We're encouraged to see the in-depth technical work continuing to show positive results across the board, including simple metallurgy, high recovery, and competent geotechnical conditions. Work on the initial project PEA is well advanced, and we look forward to releasing these results from the study in early September. I will now turn the call back to Paul.

Thanks, Will. Following a strong first half, our business remains in great shape and on track to deliver our full-year commitments. There is much to look forward to for the remainder of the year, and beyond that, we remain excited about our future. We have a strong production profile. We are generating significant cash flow. We have an investment-grade balance sheet that is continuing to strengthen. We have an attractive dividend. Looking forward, we have an exciting pipeline of both exploration and development opportunities. And we are very proud of our commitment to responsible mining that continues to make us a leader in sustainability.

With that, operator, I'd like to open up the line for questions. Thank you. The floor is now open for questions.

If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. And again, press star one to join the queue. Your first question comes from the line of Josh Wolfson of RBC Capital Markets. Your line is open.

Thanks very much. The first question is on the production guide. I think there was commentary earlier this year about the first half being softer. Given that production has been so strong, is it reasonable to expect to step up still in the second half on some of the prior guided items?

Good morning, Josh. We remain focused. We've had a very solid first half of the year. mind sequencing setups going and making sure that we need to, you know, continue going forward to our guidance. So relative to the mind sequencing, both at TASIUS and at PARITRA II, we expect to be right on guidance for the year.

Okay. So you wouldn't expect an improvement for those specific assets in the back house?

No, we're remaining on our plan, which did have us pushing a little bit harder in the first quarter for those two big ones. And then the rest of the portfolio, we've got some puts and takes, which gives us, sets us right up on guidance.

Got it. Okay. Second question, on the Great Bear upcoming PEA, you know, there's been some impressive exploration that we've seen, at least reported, post the cutoff date as of April for the study. Is there any sort of potential we get a resource update as well that might, even though it might not be included with the economics, but possibly we'll see what the expiration upside has been this start?

Yeah, we will plan to update the resource at the time that we put out the PEA, just to make sure it's kind of the two pieces of the picture tied together with latest information. We've closed off the drilling for that as of April.

that that's where we'll be yeah there's always as you can appreciate a lag um but obviously as we're coming to the market with an update we'll bring whatever else we can at that time go ahead thank you uh and then last question is just on the on the cash flow side of things um you know a lot a little bit of some moving parts this quarter and also the first quarter Working capital inflows are very strong, which helps free cash flow, but cash taxes also have been tracking, at least in the first half, fairly high versus the annual guide. Any sort of commentary you can provide on whether we'll see cash taxes maybe decline in the back half or working capital outflows are reversed, at least in the second half?

Sure. Josh, it's Andrea. The working capital, you know, has been closed. So, in Q1, we had a networking capital outflow. Q2, it was an inflow. So, you know, that just sort of cycles throughout the year. It's really just around timing. At the end of Q2, our payables were higher and, you know, those are just things that we paid in July. So, nothing really of note there. On the taxes, We did make an installment payment in Mauritania of $25 million, so that's probably the one piece that's outside of where we started the year. Other than that, our taxes should be kind of as expected through the year with the gold price sensitivity, which I think we provided in our guidance.

Okay. Thank you very much.

Your next question comes from the line of Lawson Winder of Bank of America Securities. Your line is open.

Thank you, operator, and good morning, team, and thank you for the update. Just a couple for me. Where I actually wouldn't mind starting is just on your thoughts around the year-end reserve and resource update for the assets other than Great Bear. Is there any thought internally to potentially increasing the gold price assumption? And if so, which assets would have the greatest sensitivity to that? And then secondly, given a full half of drilling, which assets are looking well-placed to potentially replace reserves? Thanks.

Sure, I'll start and others can maybe jump in. It's a fair question. I think we're all sort of looking at spot and where we've had our reserve resource price assumptions and thinking about what we will or will not do later this fall. That's a decision we'll make later in the fall as we go into our budget cycle towards November into December. So I think it's For today, all I'll say is that we're sort of steady as she goes. I would say, though, that our focus is really about margin and cash flow. Our mills are full. We're stockpiling low grade. And as we sit here today, you know, the higher gold price, it really, what it really drives is the margin and the cash flow. So when we think about the reserve resource, There may be some opportunities there, but all under the heading of maintaining margin and cash flow. And as you point out, each asset's a little different. The asset in our portfolio that has the largest resource where we'll think carefully is Great Bear, sorry, Ball Mountain, where we've got about 4 million ounces of resource. So we'll be thinking about that as we go further into the fall.

Okay, that's very helpful, Culler. If I could a little bit and ask on M&A, and like I'll preface it with the statement that I understand, you know, Kinross is in a pretty good position in terms of projects in the portfolio, especially in the near term and long term with Great Bear. But I mean, what is Kinross's thinking in terms of potentially being opportunistic in M&A and also with the context that The Ken Ross Gold valuation has improved over the last year, and the cash position is improving.

Yeah, sure. Look, and I think you got it right, Lawson. I mean, we're in great shape with our organic portfolio. We've got lots of opportunities within our portfolio. that we can turn on, and we will be looking to further advance studies in economics. So that's one bit of good news. The portfolio itself, we've got an excellent balance sheet. We're certainly not under any pressure to do anything in that regard. And so when we think about M&A, it's really, when you use the word opportunistic, it's where could we see value? Where could we add value? And again, I would say we have a very strong technical acumen. We can bring that technical acumen to bear to help turn things around, to help improve. We also have an excellent balance sheet, and so we can bring capital to the equation. So not under any pressure. If something came along that made sense where we thought we could create value for our shareholders, we'd have a look at it.

Okay, and then just finally on Nevada, in an area where over the past number of years there's been difficulty with finding skilled labor and there's been some elevated labor inflation. On the Q1 call you commented that you are seeing an improvement both in terms of employee turnover as well as pressure on wages. Is that commentary still fair? What are you seeing, you know, one quarter later? Thanks.

I think the commentary is fair. We are seeing still a positive trend on our turnover rates and, you know, the morale and things like that. And as we move forward with the teams in Nevada were performing very well. So we're going in the right direction. It is still a tight labor market, but we feel very comfortable about what it is that we're doing.

Okay. Thanks, Paul. Thanks, Colin. Appreciate it.

Your next question comes from the line of Mike Tarkin of National Bank. Your line is open.

Thanks, guys. Congrats on the good quarter. To start with, You know, Tassius looks like it's doing very well to its nameplate. Just wondering now with operations kind of running around nameplate, are there any initial thoughts that nameplate capacity could potentially be beaten a bit? And if so, is the mine set up where it could actually leverage that? Or is the constraint really more on the mine? Or could you actually utilize excess capacity that exists.

Yeah, Mike, Claude again. I think our major focus has gone through 10 years of being on a project phase. And we're now six months into it being an operating mine at full tilt. We'd like to stabilize it there for some time and make sure that we meet the expectations. But we're always Having said that, we're always looking at opportunities on how to improve recovery, how to improve throughput. I don't think we're constrained by the mine. We have some stockpile. So the real focus is on just making sure that we attain the reliability that we expect out of that plant and maintain its performance. And then we'll look at sort of incremental, continuous improvement sort of things. But I don't foresee in the near to medium term an expansion again. at that particular slide.

Great. Thanks.

And then it sounds like we could see an uptick in ounces or tons at Phase X, but given the number of the drill results you've been kind of highlighting with the recent quarterly results, seemingly multiple times what the resource rate is, could we How are your thoughts there? Are you going to put a fairly significant grade capping on some of those really high grade hits? Or with a resource update, could we actually see a lift in grade two with the ongoing impressive results you're seeing from that drill program?

I mean, obviously, we're very pleased with the results that we're seeing, and it is higher than the grade of the target that we're going after there from the historic drilling. Brown Mountain does have a long history of positive reconciliation and a lot of visible goals, that type of thing. So there will be capping and some controls on that when we do establish a resource for the underground. We don't have a resource out there yet that's specific to that underground target. That's something that'll come in next year. But certainly there would be, as usual in that type of deposit, some amount of capping. We really are looking at it. We're only getting into the drilling. We're really getting into the drilling on the main bulk target now. And that's the key piece is the overall grade for that bulk high productivity mining. That's our vision for this asset.

So with respect to the results realized to date versus what you've kind of verbally communicated as a ballpark target for grade, are you feeling very comfortable, comfortable, really comfortable? versus delivering to those expectations you've given in the past?

We really need to do the work and come up with a better answer once we have an actual resource. Obviously, seeing these types of grades makes us more comfortable with why we're down there and the long-term margin potential that we see there. And there's two pieces. It's not just the grade that has us pleased with the results. The fact that these results are outside of the main target area. So there's two key pieces. One is growing the target. The other is growing the grade of the target. These drill results are positive indicators on both of those fronts. But we don't really, until we get more drilling, we don't have a revised view on the entire system.

Okay. One last question on it. some of the intercepts are also showing very good widths. Is that proving in line with expectations internally, or are you finding some of the really wide intercepts actually proving more positive?

Again, this is really a bald target. I mean, in what we're envisioning and some of what we've put out there in the past, this is large stoping wide stoves transverse and stoking of some sort um so we've we see with well in excess of what what we've released recently in some of our historic drilling okay well for that high productivity uh contemplating and maybe it's too early but how are you kind of feeling about the the quality of the rock there do you feel

that there'll be any kind of geotechnical challenges, or do you find the rock is expected to be extremely competent for underground mining?

Yeah. Given the history of, I guess, underground mining in Nevada, we certainly went into this cautiously and with a pretty wide tool set in terms of how we prepared ourselves to handle geotechnical conditions. We do have some faults that we were well aware of in advance, and we for as we progress the decline. But really, we've been extremely pleased with the progress of the operational team on site and what they've done from a geotech perspective. And that's increased our confidence in our ability to operate in this ground. It's not extremely competent ground, but it's also not extremely core ground that we've seen at some other assets in Nevada in the past. So we're comfortable with where we're operating at and the controls we have in place.

Okay, great. And then just on an overarching kind of question, obviously you're getting really great exploration results out of all of these assets, curlew, great bear, round mountain phase X. Is there any thought, like, could you put more drills to work or is it just, you know, as you kind of need these, you know, additional drill bays in the underground to kind of get things going? Like, I understand it. Great Bear, obviously, it makes a heck of a lot more sense to drill from underground than from surface, given the depth it's you're hitting. It makes sense to test it, but, you know, to really infill it in cost efficiency from underground makes a lot of sense. But is there, you know, thoughts towards increasing budgets?

Yeah, go ahead.

So, I mean, I'd say at Great Bear specifically, the idea of this deep drilling was to provide information for the PEA to give you kind of a snapshot in time view of what the potential of the underground is. This is deep and expensive drilling. So as you clearly understand, it is more efficient to be drilling at one and a half kilometers from underground to the actual infill drilling. But of course, when we're encouraged by results, not just at Grey Bear, but at other places like Phase X, when you get good results, it does sometimes open up the opportunity to do more follow-up drilling. So we continuously review that process. We're going to increase those budgets. We'll certainly let you know. But right now, we think we've done what we wanted to with Grey Bear in terms of illustrating and providing a strong view on on that kind of core of the deposit so that we'll be able to give a pa with an understanding on costs and margins and we've shown that the ore body continues beyond that really this with this underground type of system this resource will develop over a long period of time as we continue to mine and we keep that material in front of us going from underground okay thanks very much that's it for me

Your next question comes from line of Kerry McCreery of Canaccord Genuity. Your line is open. Hey, good morning guys.

Just looking to 2025, given it's less than six months away, the capital guidance of 850. I know that doesn't include improved projects, but I'm assuming that includes the underground work at Great Bear. But I guess what I'm asking is, are there other projects that we should be expecting that could be approved and, you know, bump up the 2025 capex number?

Sure, I'll start and we'll maybe jump in after with some specifics. But yeah, I mean, we typically say, you know, as you said, we print the guidance for CapEx for years two and three based on what's approved. And then it typically loads up and we're expecting CapEx for 25 to be, you know, in the range of where it is for this year and last year. So around that billion dollar range for 25 as well.

And what are the projects that would be driving that?

So, Phase X is an example of a project where, you know, we're still doing the work, so that's not, that doesn't yet have, beyond the kind of exploration work that we're doing, there's not an approved budget for next year. So, those are the things that we'll extend it. Curlew is somewhere else where it's possible we'll be starting to spend some money, and we're looking at some short extensions at Bald Mountain that could affect that number.

And then secondly, could you just remind us how you're thinking of the mine life at La Coypa and how Lobo Market fits in? You know, do the metal prices change that timeline at all?

Yeah, I'll start and then maybe hand over to Will. So our Chile strategy really, we've got the resources in the ground around our infrastructure at La Coypa. continuity of production is really a permitting exercise and we're going through that right now. As I say, we've got to get a permit to do a layback, that sort of thing. So that work is underway. Our strategy is what we envision is a linear transition from La Coypa to Lobo towards the end of the decade. So our view is we get those permits, we keep mining the oxide. What we're just starting to do right now is ramp up our environmental baseline studies for the longer lead time to start to think about bringing LOBO in behind Great Bear towards the end of the decade. At a high level, that's really what's going on. And our strategy there, our key strategy is The synergy is around the water strategy. As you may know, we have permanent pumping water wells that have operated for many years at La Coypa. Those wells are physically closer to Lobo, and our strategy is to use the same amount of water, same wells, but switch from La Coypa to Lobo towards the end of the decade.

Okay, great. And maybe one related question. I know there was regulatory issues at Mariconga a few years back, but there's still 6 million ounces sitting there. Is that something that you're looking at as a potential restart at some point, or is that going to be on the shelf for a while?

Okay. Well, I think, again, there's option value there. You're right. It's a drilled-out resource. Again, water is always a question. In Chile, what would be the water strategy? That is a different question. water source and water basin, but yeah, there's no plans right now as it relates to Maraconga, but it is a drilled-out resource that we'll continue to think about.

Okay, great. That's it for me. Thanks, guys.

Your next question comes from the line of Anita Soni of CIBC World Market. Your line is open.

Hi, good morning, Paul, Claude, and Andrea. I just wanted to ask, firstly, on Perica 2. So the grades picked up in this quarter, and I was just wondering how that evolved over the rest of the year.

Anita, as we go through the different parts of the in Perica 2, we have seen that this year overall is a little bit lower than last year. But as we move from one part of the pit to the next, towards the end of the year, we go back into the higher grade piece. And then you'll appreciate that when we talk about higher grade, it's a marginal difference. And next year, our guidance is higher and similar to last year, whereas this year is the dip outs. We maintain focus on that 510,000 LTC guidance. OK.

Thanks. And then just in terms of the debt repayment, Andrea, I know you guys paid a significant amount of debt this quarter, and you indicated that you intend to pay the billion as it comes due in the spring. But could I get, assuming gold prices remain where they are, if we're lucky enough for that to happen, what would be your capital allocation strategy after that debt is repaid?

Yeah, what I'd say is, you know, at gold prices where they are now, I don't expect that we'll get through the whole term loan this year. So we'll carry some forward into probably the first half of next year. The maturity is March 2025. But, you know, typically we've got some more chunky annual cash payments coming out of Q1. So there may be, you know, a little bit left as we get into this We may be just getting out of it this time next year, and I think that's when we'll stop and think about our priorities around capital allocation.

And is it fair to say that about $500 million is the amount that you would like in cash on hand? I'm just looking at historically what you've held.

It's really a timing thing. I mean, we had close to $500 million at June 30th. And then, as I commented earlier, our payables were a bit up at the end of the quarter, so that cash came down in July. We typically, you know, our minimum cash is around $300 to $350 million. Sometimes it's more, and it just depends on, you know, plans to efficiently move cash, you know, around our operations.

Okay. And then my last question, I'm just going to tie up some loose ends because I know analysts are asking, like, around the edges around this one, but... As we get to 2027, 2028, before Great Bear comes on stream in mid-2029, I think there might be some assets that are scheduled to end mine life, like Bald Mountain. Maybe there's a little bit of a dip at La Coypa. And I think in 2027, it's still in a low-grade phase. Could you talk about some of the assets that might see an extension to fill in that dip? I know you guys have said you see the 2 million ounces sustained to the end of the decade. I just want to get an idea of which assets could turn on stream and flatten that profile in analyst models.

Yeah, sure. It's Paul here. I think for 2027 in particular, we're thinking about Phase X coming on stream. in combination with Phase S, curlew, and of course, as I spoke to a moment ago, continued mining at La Coypa, where the model would suggest we stop in 27 today, but as I indicated, our intention is to keep mining through permitting known resources through the end of the decade. So those three in particular, There's also some other things around the margin that we'll be looking at as well.

And where is Bald Mountain in that?

Yeah, there are some things. Bald Mountain's a bigger question. Again, as I said earlier, we do have about 4 million ounces of resource there. We've been focused on the lower capital quick payback opportunities. We see some of those, but there are certainly on the ball property some larger capital opportunities. Again, in that regard, it's just really about internal gold price competition for capital return. The gold is in the ground. We're just looking at the economics and thinking about when you would turn on potentially those larger capital opportunities. larger capital and therefore longer return projects.

And we have just received a juniper permit, which is a significant kind of optionality expansion at Bald Mountain. So we're well permitted and everything is basically internal decision-making and capital allocation.

Okay. Thank you. That's very helpful.

Your next question comes from the line of Tanya Jakuskakonek of Scotiabank. Your line is open.

Oh, great. Good morning, everyone. Thank you so much for taking my questions. I have three. First of all, congrats on a good quarter. And thanks for the heat bleach information. We don't need any more issues in this sector. So it's sad to see that these things happen. Just, Claude, starting on the operational front, just wanted to ask about, you mentioned that higher grade, relatively higher grades at PARCA2 and Q4. obviously, Manchot in Q4. So it looks like Q4 should do better. I just want to know, is there any maintenance shutdown in any assets in Q3 or Q4 that I should be considering in the quarterly estimates?

Yes. So for TAS, yes, we're getting to the point where we have to do big liner changes. So that's happening in Q3. And we do have sort of run-of-mind stuff happening at the COIPA as well, in terms of shutdowns. And those two will have an interest. As far as Baraka 2 is concerned, a lot of those are into the early next year.

Okay. So if I look at that, should I be thinking that these two last quarters should be relatively similar if I was to, you know, adjust for these maintenance in Q3?

Yeah, I mean, it may have become apparent that we're really trying to flatten out the waves in the quarters over the last couple of years at Kinross. So, you know, we keep focusing on being in that 500, you know, 2 million divided by 4 type range, 500, 525, 2.1. So we're focusing on making it more sort of repetitious versus these highs and lows.

Okay, now that's helpful. Thank you so much for that.

Your next question comes from the line of Ralph Profiti of Eight Capital. Your line is open.

Thanks, operator. Just quickly, please. Andrea, on Mauritania elections, You know, no mining-related issues, but just wondering when the next budget is presented, are you expecting any sort of fiscal-related matters regarding sort of tax policy that may impact Kinross and Tassius, either positive or negative?

I'll take that, Ralph. Yeah, look, I mean, as you saw, President Keswani was just reelected from a strong majority. We're very pleased to see that. We have an excellent relationship with his administration, and he's shown himself to be very much a pro-business and is really, you know, the country themselves, I think, prides themselves on the stability that they offer in the region. So we're not expecting anything really That's going to change. You may also recall that we actually have a stability agreement that we signed that gives us clarity on our fiscal regime. We renegotiated that a few years ago. So, you know, short answer is not expecting any changes. It's obviously the elections happened. It's sort of summer. I'm politically there now, and I expect there may be a reshuffling of the cabinet. And we're looking for... I'm personally planning to get over there in, hopefully, early September and meet with President Goswami and perhaps any new ministers that have been changed out. But it's all very stable and very good.

Okay. Thanks for that. If I could just get an update with respect to Great Bear and the AEX permit, and just wondering if you sort of measure it against precedent. You know, we're still a ways off from the underground decline in mid-2025, but just wondering how we're sort of tracking, maybe get sort of a firmer timeline on when that permitting can come due.

Yeah, sure. Maybe I'll start, and then I'll ask Jeff to jump in. He's been leading the charge, so to speak. You're right. So the strategy, the permit strategy there is really divided into two parts. Provincial permits that'll support the AEX, the exploration decline. And, you know, again, we've been hard at work at that. And I'll let Jeff comment on sort of our expectations on timing. And then the second part, build the mine, as you recall, if you're greater than 5,000 tons per day in the mill, you get kicked into a federal review. So we've got a parallel permit strategy going for the main project, which is naturally somewhat lagging behind the exploration. And in that regard, again, well underway. I'll let Jeff speak to the timing of of the main permit and what we're doing there as well. Sure. Thanks, Paul.

What I'll do is I'll just quickly divide it up in between the provincial permitting process, AEX, as Paul just described, and the main project. Turning to AEX, our team has completed a tremendous amount of work with the Ontario authorities and our First Nations partners, Wabaskang and Lac Seul, and they provided express letters of support to the authorities for AAX permits. We're expecting our AAX permits in the near term, you know, with a view to commencing early works at age two of 2024. With respect to the main project, and as previously disclosed, you know, we remain engaged with IAC on the impact assessment process. As we've made the market aware, we previously filed our detailed project description. We're waiting on IAC to provide the tailored impact study guidelines, which we're also expecting in the near term. And as you'll appreciate, that will underpin the impact assessment report. And so, on both fronts, I would say we're in good shape and we're making, you know, great progress.

All right. Thanks. That's what I was looking for. Appreciate it.

We have a follow-up question from . Your line is open.

Great. Thank you so much. Operator, please don't cut me off. I have two questions. I had three to start. Now I have two. Just wanted to come back, Andrea. Just on the balance sheet again, I think in the previous office call, we talked about $300 million reduction this year. You've done $200 million. Should I be thinking another $100 million? Or with this stronger free cash flow generation, could we see more occurring in 2024? And then I think you said another $500 million or thereabout repayment in 2025, sort of by the first half.

Yeah, Tanya, I think looking back at 300 was when we were talking about 2000 gold. So our sensitivity is, you know, for every $100 in gold prices, an additional 200 million in cash flow, that's an annual number. So we've obviously seen higher gold prices. So that 300 is, you know, what we've seen recently more in the 700 million range is what we'd expect for this year. So, as I said earlier, we will have some left next year, but, you know, a lot lower than we had talked about as we started the year.

Okay. So, it's probably more than debt repayment this year . Yeah. Again, pick your goal price.

At $2,300, you know, in total for the year, I think we'd project $700. Yeah. Okay.

That's very helpful. Thank you so much for that. And then my last question is just on the right there. And I think, Paul, on the previous conference call, we had talked about still the 10,000 ton per day scenario, sort of 5 million ounces giving us that 500,000 ounce annual production. I guess the, you know, we'll get an updated resource in early September. How should we think about the capital and the operating costs? I mean, those numbers of, you know, capital of $1 to $1.2 billion, and I think the all-in sustaining were about $800 an ounce. Those are quite stale numbers. Should we be thinking something in the sort of 10% to 15% inflation adjusted for these? You know, they're just old numbers. So we just want to make sure that, you know, we're not caught off guard on the release.

Sure. Yeah, that's a good point, Tanya. I mean, look, I mean, inflation has come down, but it hasn't gone away. So to the extent we were saying 1 to 1.2, I would say 1.2 in today's world from where we started two years ago is more, is directionally more where we're thinking for initial capital. On the sustaining cost, again, we're going to be out with the detail in a month, but I guess I would just say we're still fine-tuning, but directionally, we have always had basic less than 1,000, and we're certainly feeling good about the direction we're going there as well. So, look, again, and that's in the context of today, you know, mid-year 2024, construction, still won't be happening for a couple years. So whatever I say today, you know, like the 1.2 plus inflation, we expect will probably continue, but not, I guess what I'm trying to say is this is inflation around the edges. It's not a dramatic departure in what we thought the capital would be. It's, this is a very straightforward project. In the greater scheme of things, this is not a large capital ticket for us. This is something that we forecast that will be, you know, quite manageable with our existing cash flow. And so, I guess I'm trying to, you know, the report will be out in a month, but I'm managing expectations that, you know, that we're reasonably on track with where we indicated we would be.

Yeah, I appreciate it. I mean, you know, I appreciate that. It's just, you know, having an idea that, you know, we have seen some inflation. Some of those numbers would come into these sort of stale numbers that we had of like three, four years ago, and if not longer. And it's just, you know, we appreciate that that will be a 2024 number. And then, obviously, by the time we build you know, later, a couple years out, it will be different at that point. But appreciate the color. Thank you.

Thank you.

That concludes our Q&A session. I will now turn the conference back over to Paul for closing remarks.

Top Reader, and thank you, everyone, for joining us this morning. We look forward to catching up in person in the coming weeks. Thank you.

This concludes today's conference call.