Kinross Gold Corporation

you would like to withdraw your question again press the star 1. thank you i'd now like to turn the call over to david shaver senior vice president of kinross gold you may begin thank you and good morning with us today we have paul rollinson 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 November 5th, 2024, the MD&A for the period ended September 30th, 2024, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

Thanks, David, and thank you all for joining us. This morning, I will provide an overview of what was another strong quarter for us, discuss high-level updates on our operations and projects, and confirm our outlook. I'll then hand the call over to Andrea, Claude, and Will to provide more detail. Q3 was another excellent quarter for us, building on our strong performance in the first half of the year. Our portfolio of mines continues to perform very well. As of Q3, we have produced just over three quarters of our full year production with costs tracking in line with our guidance range. Our ability to hold costs in this rising gold price environment continues to benefit our margins. We grew our operating margins by 14% over the prior quarter compared to a 6% increase in the gold price. As a result, we generated record quarterly free cash flow of $415 million, an increase of approximately 20% compared to the prior quarter. For the first nine months, free cash flow was over $900 million. We have continued to allocate excess free cash towards debt repayment and have now repaid $650 million out of the $1 billion term loan. Looking ahead, we are in a strong position to make further repayments to the term loan before year end. With respect to operations, our production in the third quarter was strong, delivering 564,000 ounces at a cost of sales of under $1,000 per ounce. Our two largest assets, Tassius and Perica 2, both perform well, with production increasing at both sites over the prior quarter. Tassius had another excellent quarter, delivering exceptional free cash flow from high margin production. Perica 2 also had a standout quarter with higher production and cash flow over the prior quarter. At La Coypa, we remain on track to deliver our production guidance. At our U.S. operations, production was on plan and higher over the prior quarter as initial production from higher grade Manchot commenced in early July. Moving to updates on our project activities. We continue to make good progress across the portfolio in the third quarter, including the addition of two senior executives who bring notable large-scale project construction experience in Ontario and Chile. These additions come at an important time as we focus on our project development priorities at Great Bear and Lobo Marte. At Lobo Marte, we see an excellent long-term potential for another long-life, low-cost asset with meaningful production. At Ram Mountain, we continue to advance Phase X with drilling, demonstrating exciting grades and widths, which Will is going to speak to later. With respect to Great Bear, we continue to make excellent progress. As discussed during our PEA presentation in September, we have illustrated the top-tier potential of this asset. The PEA outlines significant annual production of approximately 500,000 ounces and robust cash flow with an impressive all-in sustaining cost of approximately $800 per ounce. The study outlined strong base case economics, and at current spot prices, the project generates an impressive NPV and IRR with a modest initial project capital requirement. As we indicated, the PEA represents only a point in time estimate, and we continue to see geologic potential to support a multi-decade mine life. For the Great Bear AEX program, permitting and detailed engineering continue to advance. We recently reached an important AEX permitting milestone with the submission of our final closure plan to the Ontario Ministry of Mines. We expect approval of the closure plan shortly, allowing for commencement of early works construction. Regarding permitting for the main project, we continue to work with the Impact Assessment Agency of Canada on the impact statement, which we plan to file next year. In addition to the projects I just touched on, our team also continues to advance our study work and other opportunities. And we look forward to providing more updates on this work in 2025. Moving to our outlook. With strong year-to-date performance, we are well positioned to meet our full year production and cost guidance. Our continued focus on operational performance, strong grades at multiple assets, and rigorous cost discipline are driving record margins in free cash flow. In addition, we are also advancing exploration to further support the future of our business. With that, I will now turn the call over to Andrea.

Thanks, Paul. This morning, I will discuss our financial highlights from the quarter, provide an overview of our balance sheet, and comment on our guidance. Our third quarter performance was strong with production, cost, and cash flow all improving over the prior quarter. We produced 564,000 ounces with sales of 551,000 ounces and remain on track for full year production of 2.1 million ounces. Cost of sales was $980 per ounce, improving from $1,029 per ounce in the prior quarter. With an average realized gold price of $2,477 per ounce, we delivered strong margins of approximately $1,500 per ounce. Margins improved from approximately $1,300 per ounce in the prior quarter, and as Paul noted, this improvement outpaced the increase in the average realized gold price. All-in sustaining cost was $1,350 per ounce and was lower over the prior quarter primarily on higher gold sales. For the first nine months, cost of sales was $997 per ounce, and we are on track for our guidance of $1,020 per ounce for the year. In Q3, our adjusted earnings were 24 cents per share and adjusted operating cash flow was $625 million, both improving over the prior quarter. Capital expenditures were $276 million in the third quarter and $772 million in the first nine months. In Q3, we generated $415 million of attributable free cash flow or $350 million excluding positive working capital changes. Year to date, we have generated an impressive free cash flow of $906 million. Turning to the balance sheet, our financial position continued to strengthen in the third quarter. After repaying $200 million against the term loan in Q2, we repaid an additional $350 million in the third quarter and then made another $100 million payment last week. In total, we have repaid $650 million this year, leaving $350 million outstanding. Looking forward, as Paul mentioned, we expect to continue to make payments against the balance before the end of the year. Over the last 18 months, we have reduced our net debt by approximately $1 billion and our net debt to EBITDA from 1.7 times to 0.5 times as of the end of Q3. With respect to guidance, we remain firmly on track for all of our key metrics. I'll now turn the call over to Claude to discuss our operations.

Thank you, Andrea. Starting with our most important value, safety, I'm pleased to say that our Global Safety Excellence Program, which was launched in 2023, has now been completed by over 70% of the workforce, including both employees and business partners. Under the spirit of continuous improvement and building on our successful track record, This quarter, we finalized our health and safety brand called Safe Ground, which represents the importance that TNRAS places not only on physical safety, but also psychological safety and respectful workplaces by reinforcing the importance of creating a culture in which everybody feels they're on safe ground to speak of. Moving on to our operating performance. As Paul indicated, our operations performed well in Q3, TASIUS delivered production of 162,000 ounces at a cost of sales of $688 per ounce in line with the prior quarter. Production benefits from stable mold performance with throughput increasing to a new record. TASIUS was once again our lowest cost asset, driving significant free cash flow. With slightly lower grades and maintenance plan in the fourth quarter, TASIUS remains on track to meet its full year production guidance 610,000 ounces at a cost of sales of $670 per ounce. At Pareto 2, production of 146,000 ounces at a cost of sales of $1,006 per ounce improved over the prior quarter, driven by stronger grades and recoveries. As planned, mine sequencing has started to transition into the higher grade portions of the pit, which is expected to support higher production next year. Paracouture remains on track to meet its 2024 production guidance of 510,000 ounces at a cost of sales of $1,080 per ounce. At La Coypa, Q3 production was 51,000 ounces at a cost of sales of $1,074 per ounce. Throughput at La Coypa is being managed while mill optimization initiatives are being implemented. Production remains on track for a full year target of 250,000 ounces. Moving to our U.S. operations, production of 205,000 ounces was driven by a strong contribution from our operations in Alaska. Our U.S. sites remain on track to achieve full year guidance range of 730,000 ounces at a cost of sales of $13.30 per hour. In Alaska, production of 120,000 ounces was higher compared to the prior quarter on record mill grade and recovery, as production commenced from the higher grade manager during the quarter. Construction and commissioning of the four drafts mill modifications were completed in Q3, with the project now fully transferred to the operations team and is performing as planned. Cost of sales of $973 per ounce was lower over the prior quarter, primarily due to the higher production from Manchur. At Bald Mountain, we produced 43,000 ounces at a cost of sales of 13.26 per ounce. At Round Mountain, production of 42,000 ounces was lower over the prior quarter due to fewer ounces stacked and recovered from the heap leach beds as per our planned mining sequence. Cost of sales of $1,540 per ounce was in line with the prior quarter. At Phase S, mining remains on track and construction of the heat bleach pad expansion was completed on schedule in Q3. And Phase S production is expected to begin in the second half of next year. With that, I'll now pass the call over to William to discuss our projects.

Thanks, Claude. Moving to updates on our projects. At Round Mountain Phase X, development of the exploration decline continues to progress well, with over 2.7 kilometers developed thus far. Exploration drilling has also progressed well, and in Q3, we started infill drilling of the primary phase X target, which is shown in purple on the slide. The infill drilling has shown exciting results, as is highlighted by the red stars on the slide, with multiple high-grade intercepts with strong widths, including DX71, which intersected approximately 37 meters at 10.7 grams per opportunity drilling this year outside of the primary exploration target has also shown strong grades and widths indicating potential to expand mineralization at phase x of particular note dx52 intercepted an impressive 30 grams per ton over 32 meters and 11 and a half grams per ton over 23 meters outside of the original exploration target we are pleased with these results which continue to support our hypothesis potential for higher margin mining from a bulk underground at phase X. Moving to Curlew Basin, exploration drilling this year has continued to expand mineralization in the lower areas of our resource where we see good margin potential on the back of strong grades and widths. As you can see on the slide, a recent hole at the stealth zone returned approximately 14 grams per ton over 10 meters, well outside of our existing resource. We are encouraged with the results on both exploration and mine plan optimization, which are highlighting areas with good mining woods and strong grades. As Paul mentioned, we recently welcomed a new senior executive to our team in Chile to oversee the progression of Lobo Marte, and we are currently advancing baseline studies. As a reminder, we published a feasibility study on Lobo in 2021, which highlighted a high-quality development project located in close proximity to the La Coypa mine. Lobo Marte has significant potential for high margin production driven by the strong heap leach grade of 1.3 grams per ton and a low strip ratio of 2 to 1. The asset has significant scale with the study highlighting 4.7 million ounces of production over a 16-year mine life with the average annual production of approximately 300,000 ounces. Strategically, Lobo has the potential to be a key low-cost contributor to our production profile in the 2030s. Lastly, with respect to Grey Bear, as Paul noted earlier, we released a PEA in Q3, which showed robust economics, impressive margins, and a quick payback, as you can see highlighted on this slide. In addition to the impressive geology and economics of the project, our significant technical work to date has also demonstrated a clean and straightforward project across the board, including clean metallurgy with high recoveries of over 95%, a straightforward 10,000 ton per day milling circuit, competent geotechnical conditions, a robust tailings management strategy, and significant production flexibility from combined open pit and underground operations. It's important to note that these strong PEA results are just the beginning of the value story at Grey Bear. This is a point-in-time estimate showing only a window into the underground potential based on the drilling we have been able to do from surface prior to April of this year. As you can see on the slide, we also already have multiple intercepts well below the PEA resource with strong grades and widths, demonstrating continuity of the system at depth and the significant potential for further expansion of the resource. Given we have already drilled out a PEA inventory providing a robust 12-year mine life and demonstrated continuation of mineralization beyond that, we will be wrapping up deep drilling from surface at LP this year and shift our focus to progressing the advanced exploration decline provide a platform for infill drilling from underground. This provides more efficient drilling than from surface at these depths. In parallel to developing AEX, we are also excited to be shifting our exploration focus to regional targets on the 120 square kilometer land package, looking for both open pit and underground opportunities. As you can see on the slide, there is an 18-kilometer trend at Great Bear, which has seen limited drilling to date as we have largely been focused on drilling off the resource at LP on approximately four kilometers of that trend. We look forward to sharing those results with you through 2025.

I will now turn it back to Paul for closing remarks. Thanks, Will.

Following a strong third quarter and first nine months, our business is positioned for a strong end to the year. Looking forward, we are excited about our future. We have a strong production profile. We're generating significant free cash flow. We have an investment-grade balance sheet that is continuing to strengthen. We have an attractive dividend. 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. We will now begin the question and answer session. If you 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 1 again. Your first question comes from the line of Josh Wolfson from RBC Capital Markets. Your line is open.

All right, thanks very much. Just wanted to ask on Manchot, very strong results this quarter. It looks like both the contribution from throughput and grade. Is there any visibility you have into the sustainability of some of these results, I guess, maybe more so on the throughput side, which probably has more likelihood of being sustained?

Good morning, Josh. Yeah, so we've reached a sort of stable production from that as we get a mill roughly 180 to 2000 tons a quarter from that show. So we're at a stable rate and bending the grade that we put in the feasibility of it, we will manage it through the year. So we expect it to be consistent with what we've been able to do so far.

Okay, maybe just more specifically, 380,000 tons this quarter is pretty high and above steady state. Are there some characteristics of the ore that would prevent that from happening going forward, or is that a reasonable forecast going forward?

We're balancing it with the transportation, so roughly 200,000 per quarter from ANCHO, but also the Fort Knox production. It's being balanced. The hardness of the ore is predicted to be stable over the coming years.

Okay, thank you. And then a question maybe on the CAPEX side, if there's any visibility we have at this point into future numbers. I know there's a number of projects the company is looking at evaluating going forward in terms of extending asset duration.

uh you know how should we think about capex in upcoming years the number this year being 10 50 you know plus accounting for inflation and and maybe what the uh discretionary spending would be at uh critical prices thank you thank you sure uh josh so yeah he said our our capex this year in 24 is 1.05 billion looking forward i first start by saying that we are still just in our budget process now so we're you know looking at this now but um expect that, you know, it'll be not significantly above where we were this year with just maybe adjusting for some inflation, sort of what we're seeing as we look at it today.

Great. Thank you. And if I can tuck in one more question, just on the capital allocation side, I mean, I'll say fantastic results in terms of cash generation this year, you know, what I would think is comfortably above $1 billion. you know, the debt repayment schedule looks like it will be resolved, you know, within the six months that the term loans do. You know, I guess the easy part of the capital allocation seems to be done in terms of debt repayment that was identified earlier this year. Yeah, how do you think about, you know, allocating that free cash flow going forward in the context of, let's call it reasonably stable CapEx and debt no longer being as high of a priority? Thanks.

Sure, Josh. It's Paul. I'll take that one. Look, our philosophy hasn't really changed. We've been consistent in our philosophy on capital allocation. As we've said, it's needs of the business. Our business, we keep it well-maintained. We keep it well-maintained because that reduces risk. After the needs of the business, obviously the balance sheet, and as you, I fully agree, We're making good headway on taking out that term loan, and I expect it'll be depending upon the gold price early in the new year. And then it comes down, as you look forward, it's really a question of, you know, internal growth versus return of capital. But I would say, I guess I'm sadly, uh you know this morning as i look at what's happening with the gold price it's a good reminder that uh we don't want to get too far ahead of ourselves it'll be gold price dependent and we'll uh we'll no doubt get that question as we take out the term loan and get into the new year but um you know it's uh it'll be somewhat gold price dependent great thank you very much thanks

Your next question comes from a line of Anita Sony from CIBC World Markets. Your line is open. Anita, your line is open.

Sorry, I put myself on mute there. Sorry about that. First question is, well, firstly, congratulations on a solid quarter, particularly on the cost control. I was wondering, on the US operations as we look like on Bald Mountain you stacked a lot and it seems like you know that that's in the inventory. Like how do we think about the production volumes next year and into 2026? I'm assuming I was tempted to add some ounces in 2026 from residual leach, but I'm not sure how that that works out in the next two years. Could you just give some clarity on Bald Mountain?

Yeah, yeah, we we uh, Obviously, at Bald Mountain, we expect fairly stable production next year. And then based on what's in the current inventory and the current pits, that would start to taper off after next year. But obviously, we're looking at different optionality around additional pits and laybacks at Bald Mountain that could continue that production profile out for longer.

Okay, so you stop mining at the end of 2025 and then some residual leach in 2026 still? Is that still on plan?

Yeah, just based on the current pet stats without approving any new projects.

Okay. Secondly, Round Mountain, how does that, I mean, the volumes trended down a little bit this quarter. Does it still dip into the first half of next year before it picks up? I thought I read that you had constructed a new leach pad, and I'm just wondering when that starts to come on stream.

Yeah, I think next year our plan has always been that we will have lower production next year because we're getting to the bottom of phase W right now. And we're in the process of stripping phase S. So we have made a construction of the heat bleach pad, which is great because we're putting ounces on fresh liner. But we do expect a lower production profile next year before starting to ramp up again with phase S in 26 and 27.

Okay, so to wrap it up, just my question was driving towards going from 2.1 million ounces to 2 million ounces next year. The major driver, I guess, would be Round Mountain with some offset from Fort Knox, Manchew. Yeah. Okay. Yeah, there's a bit of an offset in Manchew.

Yeah. And then Taffy has a lower year next year, which that's nothing new. We've been talking about that.

Yeah. Okay. All right. Thank you very much. That's it for my question.

Your next question comes from a line of Mike Parkin from National Bank. Your line is open.

Hi, guys. Congrats on the solid quarter. On round, like the underground just keeps, you seem to keep hitting this high grade pretty consistently and looking at slide 18 with where you're putting in the infrastructure. A lot of it seems like it's right on the doorstep of that decline. Is that you know basically on design and you'll be able to access some of those higher grade zones it looks like early and just give us a refresh like you've obviously got quite a bit of development in there are we still looking at first production in 2027 is that tracking towards like the front end the back end of 2027 or into 2028 it's just any kind of color you can provide in terms of how that's shaping up in terms of first access to ore

yeah first off i think you interpret it interpret it right uh in terms of where that drilling that that's you know why we're calling it the opportunity drilling we were really doing it as we progressed the decline towards the main exploration target from the open pit so it is right there the you know additional mineralization that we've run into so that does make it very easy to access and get into um we still are looking at 2027 as the primary date for for start of fulsome operations at brown mountain but obviously we may look to do some test stoves things like that as part of our due diligence as we progress the project and it's easy to do that given that that opportunity drilling is right beside the decline and the decline itself is actually quite close to the primary target as well so we're kind of right there in terms of transitioning to production is any of the development going right through ore or are you kind of hard to tell from slide 18 but Yeah, we have crossed the ore in our development. I think last quarter we highlighted some holes where we had the from and to, and you can see in there that the from was zero, meaning that it was right at the face of the decline. So we have crossed a couple of different ore bodies there, mineralization zones, I should say.

Excellent. And just to remind us, what are you kind of thinking of in terms of average grade coming from the underground, excluding the impact of these high-grade infills?

Yeah, the original target there was kind of a three to four gram bulk target. Really, as we had talked about at the beginning there, it was all about the geometry and the significant width that we see there. I highlighted that in a few slides in the past. obviously some of the intersections we've been having are higher grade than that so that's a positive indicator but you can see on the slide that we've really just started to drill off the main target so we need to progress our work further before we have a more advanced and definitive view on the grade of the overall deposit okay and will all this drill get factored into an updated resource for the year-end reserve and resource update Not this year. Again, if you look just at the highlights on the slide, we clearly haven't drilled off that entire deposit. And there is some of that material that's already in our open pit resource. So before we do a conversion, we want to get widespread drilling across the deposit to be able to do a proper conversion. We'll do that next year. Okay.

And on the gray question, I was just going to say on the gray question, obviously, In that three to four gram, we believed that was the right zone for positive economics. But clearly, based on the grades we're getting, it seems to be trending to maybe something better than that, but we just haven't finished the work.

Look forward to the update. Thanks, guys.

Your next question comes from a line of Carrie McCrory from Canaccord Genuity. Your line is open.

Hi, good morning, everyone. Maybe a couple questions for Claude on Lacroix, but can you just talk a little bit about the optimization initiatives that you're referring to there?

Yeah, Kerry, good morning. Obviously, as we restarted this project, it's a pretty old mill, and it needs a lot of care and maintenance. We're being very selective on what we do to make sure that it runs efficiently. As you will have noticed in the last couple of quarters, we've been putting a lot of effort into that. And at the same time, we are blending the ore and maintaining our focus on reaching the objective for the year, as we indicated. And we're still targeting the 250,000 ounce production.

Are there issues on the crushing side of the circuit or grinding or any color on what you're trying to optimize for?

No, as I said, it's a pretty old mill. It did stand for eight years. And it's at altitude with different humidity levels. As we go through it, we've been able to identify some sort of structural pieces. We're slowly working through those. Across the border in the mill, we've had some We had some challenges initially on crushing, but we resolved those. Belling is not a problem, and we're now focused on filtration.

The way I think about it, Kerry, is, you know, we're just really kind of moving little bottlenecks. We address the efficiency of one area, and we get that optimized, and then we'll move down the line and look at the next place where we can get reliability, consistency, That's how I would think about it.

And then maybe a question on Bald Mountain. You've got a lot of resource there, not a lot of reserve. And you've got that Juniper project. I'm just wondering if you could give us a bit of color on what the objectives of that could look like.

Yeah, I'll start, and others can jump in. I mean, as you know, we've always said with Bald, we have quite a large resource, about 4 million ounces. And we've also said that, you know, it's really been a bit of a situation that's a bit more on the line. You know, everything internally has to compete for capital. And some of those opportunities have evolved. You really want to have a confidence in a higher gold price. The other characteristic of although, which is unlike the rest of our minds is, Instead of having one big pit where you're doing massive layback, we have a whole bunch of little pits. So, you know, again, in the context of where we find ourselves in the gold price, we will be looking at some, you know, kind of quicker payback satellite opportunities.

Okay. Thank you.

Again, if you'd like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Tanya Jakuskanak from Scotiabank. Your line is open.

Great. Good morning, everyone. Thank you for taking my questions and congrats on a good quarter. Great there. So maybe over to Jeff. Can you just walk us through exactly what we're waiting for on this permit? And then once we get this permit, assuming it's soon,

um what can be done over the winter i'm just trying to um see if we're working on a time here for uh this decline start next year thank you uh sure tanya thanks for the question um i'll i'll probably divide that up with uh will we get into the actual activities that we'll be uh doing um in the in the winter But with respect to permitting of Great Barrier, you're specifically asking about AAX, so I won't get into the federal IAC process. But on the AAX front, there's a number of permits that we're waiting on and we're expecting very shortly. You would have gathered from our press release that the first most important permit for which we require for any and all construction activity is the closure plan. And we're obviously pleased to have been invited by the Ministry of Mines to submit that for approval, which we have done along with our financial assurance. And we expect to get that final approval very shortly. So that's the first kind of key permit. Other permits also include and that we're waiting on a permit to take water from Ministry of Energy Conservation and Parks. We are also expecting that in the near term. And Furthermore, we're expecting a tree clearing permit from the Ministry of Natural Resources and Forestry. And that permit should come immediately after the approval of our closure plan. And then as we look sort of more into 2025 and more advanced AX activities, we're also expecting and waiting on some additional permits from the Ministry of Environment, Conservation and Parks in respect of certain wildlife. But again, it's not a question of if on these permits, but when and expecting all of them in relatively short order. And I would say that the last point I would make is that with respect to AAX and while we're waiting on these, they do not impact our overall main project timeline either.

Activities?

yeah on the on the uh on the activities uh generally i'll just maybe turn that over to will to talk about what we're going to do in the winter program sure yeah i mean and we can do the majority of our activities in the winter obviously to get underground at aex the main scope of activities is building a portal pad and a box cut so we can do excavation and we can do the fill for that facility over the winter and we can also work on some of the auxiliary facilities that we'll put in place maintenance shop ventilation fan etc So the majority of the work can be progressed over the winter. We're also going to continue to do geotechnical work for the wider project. We'll continue to do some RC drilling and obviously, as we alluded to on the call, exploration drilling. So the winter is not slowing us down in regards to any of that.

Okay, that's good to hear. Just cold up there. Maybe just then moving on to just the costing side. I don't know who wants to take this question. But just wanted to get a handle, and thank you, Andrea, for the CapEx for 2025. Just on the costing side, would it be safe to assume that you do have the 5% lower production outlook for next year, so that's going to impact your costs? And then we have the higher roll price that obviously also impacts your costs on the upside from royalties paid. And then we have inflation. Maybe we can just kind of understand what is the inflation right now that you're seeing in your labor? Are you in that 5% for both your employees and contractors? I'm just trying to understand how my costs should look next year over 2024.

Yeah, Tanya, I guess I'll start by saying again that we are just still in our budgeting process, but I can certainly make some observations. You're right on the factors that you highlighted that will impact costs next year. The one other area I would note, and then I'll just come back to the inflation question, is just the production mix. So with Cassius being in just a lower production year based on mine plan sequencing, being our lowest cost asset, that will have a bit of an impact on overall costs as well. And then in terms of labor inflation specifically yeah i would say but around the five or six percent um increases is what we're expecting just for labor costs that would be labor and contractors together uh and then um aside from labor costs inflation would be lower than that so averaging out somewhere in the three percent give or take um for overall inflation on average

Okay. And so if I was about that, and obviously the, you know, $100 move, it's about $4 on your cost structure for royalties and so forth. So if I was to look at this, would it, you know, as I look at your 10, I think your 1050 this year on your cost side, no, 1020, I think it was, 1020, would it be safe to assume that somewhere in the 5% to 10% rate would be reasonable over 2020?

Yeah. As I said, we're just in our budget process, but, you know, maybe towards the higher end of that 5% to 2% is kind of what we're thinking. But again, we'll come out with more guidance, more specificity in February. Yeah.

I mean, again, it'll be a combination of a few factors. There's obviously the numerator, denominator. We are going to be down a little bit. And, you know, there's the inflation, and then there's the grade effect of where is the production coming from next year versus this year. And, you know, you've got to sort of throw all of that into the hop, and that will, you know, suggest that costs will be up a little bit, but we haven't finished the work.

Yeah. And maybe, Paul, just to continue on that, I just want to talk about your reserves and cut-off grades. Obviously, that's another impact, right? And so, I just want to make sure, just trying to get your understanding on what you're thinking about reserve pricing next year and cut-off grades as well. Oh, sorry, your end.

Yeah, again, we're still doing the work. That's something we generally will put the pin in after we get through the budget process. Look, I would say, first of all, on the cutoff grades, we get that question a lot, given the goal price environment we're in. We're certainly not planning to do anything with our cutoff grades. Our mills are full. And so we'll just continue to stockpile low-grade material. So no changes on cutoff grades. As it relates to, you know, commodity price assumptions, my expectation is that within the industry you'll see some upward movement from reserve and resource prices from where they were last year. We're still thinking about that. We're not actually, you know, that impacted, but I think it's more of a movement towards, you know, the reality we're in, but I expect Across the board, probably there'll be a higher reserve and resource prices going forward.

Okay. Look forward to getting more of that next year. Thank you so much for taking my question.

And that concludes our question and answer period. I will now turn the call back over to Paul for some final closing remarks.

Thank you, operator, and thanks, everyone, for joining us this morning. We look forward to catching up with you all in person in the coming weeks. Thanks for dialing in.

This concludes today's conference call. Thank you for your participation. You may now disconnect.