Kinross Gold Corporation (NYSE:KGC) Q4 2024 Earnings Call Transcript

Kinross Gold Corporation (NYSE:KGC) Q4 2024 Earnings Call Transcript February 13, 2025

Operator: Thank you for standing by. My name is Prila, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold Fourth Quarter 2024 Results Conference Call and Webcast. [Operator Instructions]. I would now like to turn the conference over to David Shaver, Senior Vice President of Kinross Gold. Please go ahead.

David Shaver: 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 pretty refer to Page 3 of this presentation, our news release dated February 12, 2025, the MD&A for the period ended December 31, 2024, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

J. Rollinson: Thanks, David, and thank you all for joining us. This morning, I will provide an overview of our fourth quarter and full year results. [indiscernible] our operations, projects and provide an outlook for the business going forward. I’ll take a few comments on our achievements in sustainability. I will then hand the call over to Andrea, Claude and Will to provide more detail. With respect to Q4, we delivered a strong quarter, producing just over 500,000 ounces. With respect to the full year, once again, we achieved our market commitments, delivering over 2.1 million ounces. We also delivered on our full year cost of sales and unsustaining cost guidance, which demonstrates our strong focus on rigorous cost discipline.

As a result, we generated record free cash flow of more than [ $103 ] billion, which more than doubled against the prior year. This record cash flow generation also benefited from strong operating margin on, which outpaced the relative increase in the gold price. Our operating margins increased by 37% compared to a 23% increase in the realized gold price, maximizing the benefit of the gold price for our company. With respect to our operations, our 2 largest assets Tasiast and Paracatu were both [indiscernible]. Together accounting for approximately 1.2 million ounces or more than half of our production. Tasiast had an exceptional year, delivering record annual throughput, production and cash flow and once again was our highest margin operation in the portfolio.

Paracatu continued to delivered a full year production exceeding the midpoint of guidance and exceeding 500,000 ounces for the 7th consecutive year. At La Coipa, we delivered our full year production guidance as work continues on long-term optimization of the mill. In our U.S. operations, we had another solid year with production and costs on plan. Turning now to updates on our projects. In 2024, we continue to make excellent progress across our pipeline. In particular, we reached an important milestone at Great Bear with the release of the PEA in September. With the PEA, we have confirmed the top-tier potential of this asset an estimated average annual production of approximately 500,000 ounces at an impressive all-in sustaining cost of approximately $800 per ounce.

The Great Bear advanced exploration program, we have received all the necessary permits for our current activities, and we expect to receive the 2 remaining permits when they are acquired later in the year. The yearly works activities, including tree clearing and earthworks commenced prior to year-end and construction of the exploration decline is planned to commence later this year. Regarding permitting for the main project, we continue to work with the Impact Assessment Agency of Canada, and we plan to file the impact statement later this year. At Round Mountain, underground development at Phase X is progressing well with over 3,300 meters developed to date and 21 kilometers of drilling completed last year. As [indiscernible] in our news release, we are continuing to see strong exploration results from Phase X, reaffirming our vision for a high productivity and low-cost underground mining operation.

At Bald Mountain, we have unlocked additional value from the approximate 4 million-ounce resource base with the conversion of nearly 1 million ounces into reserves. This conversion marks an important first step in extending the mine life of Bald, we now see a strong case to proceed with initial mining at the Red Bird pit. We are proceeding with a disciplined approach, expecting that Red Bird could ultimately extend production from Bald through 2031. Will is going to discuss more on this opportunity later. We also continue to advance work on Curlew in Washington State and Lobo-Marte in Chile. Before moving to our outlook, I’d like to comment on our year-end reserve and resource pricing update. Given the stronger premium gold price environment, we have revised our gold price assumptions, which aligns with industry peers.

Our reserves are now determined on a $1,600 per ounce gold price. Our resources on a $2,000 per ounce gold price. Although our price assumptions have moved higher, we are not planning to reduce the cutoff grades to our mills as our focus remains on maintaining strong margins. Moving to our outlook. We are reaffirming our stable multiyear production profile. Production of 2 million ounces for 2025 remains consistent with our previous guidance. As previously guided, based on mine plan sequencing, Production from Tasiast will be lower this year, and Paracatu remains on track to deliver higher production this year. Looking to 2026, our production outlook of 2 million ounces remains consistent with previous guidance. And we are introducing a new year of production of 2 million ounces for 2027.

Beyond 2027, we expect production to remain around 2 million ounces through the end of the day. Maintaining production at this level will be based on future production from our pipeline of project opportunities, which include Red Bird extensions with Bald, open pit extensions at Maricunga, Phase X underground at Round, Curlew in Washington State and Great Bear throughout the decade. We will continue to invest these initiatives. We plan to update you on our progress as we move forward. With respect to capital allocation, in 2024, we prioritized debt repayment and we have now fully repaid our $1 billion term loan. Our quarterly dividend remains in place as our baseline return of capital. In the current gold price environment, our business is generating significant cash flow.

And if this current gold price holds, we are planning to return additional capital to shareholders later this year in the form of a share buyback. Andrea will speak more on this shortly. I’d like to comment on some of our achievements in sustainability. In 2024, we once again demonstrated a strong commitment to [indiscernible] by operating responsibly and advancing our strategy across important areas. In May, we will publish our 2024 sustainability report, which will provide a detailed overview on our sustainability performance and initiatives throughout the year. Some highlights on this past year include completing more than 15 energy efficiency projects across the portfolio placing us on track to achieve a 30% reduction in emissions intensity by 2030.

We provided food relief aid to communities in Brazil and Mauritania. We received a Sustainability Award from the Canadian Council for the Americas, and we were the top scoring gold company and top 10% overall in the Globe & Mail’s Annual Corporate Governance Survey. Lastly, I’d like to take a moment to thank Catherine McLeod-Seltzer for her significant contributions to Kinross and the Board over a 20-year directorship with Kinross. Catherine has been an independent Board member since 2005, and share of the Board since 2019. Catherine will be retiring from [indiscernible] at our AGM in May, and we are pleased to announce [ Talison ] will take on Catherine’s previous role of independent Chair. With that, I will now turn the call over to Andrea.

Andrea Freeborough: Thanks, Paul. This morning, I will review our financial highlights from the quarter and full year, provide an overview of our balance sheet and our capital allocation plans and discuss our guidance outlook. As Paul noted, we delivered production in line with guidance in 2024. Full year attributable production was 2.13 million ounces with production of 501,000 ounces in the fourth quarter. Q4 sales of [ 518,000 ] ounces were slightly above production due to timing. Cost sales of $1,096 per ounce and all-in sustaining costs of $1,510 per ounce in the fourth quarter were higher compared to the prior quarter as expected, mainly due to lower planned production from Tasiast and Paracatu. Full year cost of sales of $1,021 per ounce and full year all-in sustaining costs of $1,388 per ounce were also in line with guidance.

Margins were strong at $1,567 per ounce sold in Q4 and $1,372 per ounce for the full year. Our adjusted earnings were $0.20 per share in Q4 and $0.68 per share for the full year. Adjusted operating cash flow was [ $640 ] million in Q4 and approximately $2.1 billion for the full year. Attributable CapEx was $279 million in Q4 and $1.05 billion for the full year, in line with full year guidance. Attributable free cash flow was a record $434 million in Q4 and was also a record $1.34 billion for the full year. Turning to balance sheet. We ended the year with $612 million in cash and approximately $2.3 billion of total liquidity. We repaid an impressive $800 million against our term loan in 2024 and after making a subsequent repayment of $200 million, our $1 billion term loan has now been fully repaid.

We have now fully paid for the acquisition of Great Bear on just the 3rd anniversary with fewer shares outstanding than prior to the transaction. Over the last 24 months, we have reduced our net debt by approximately $1.4 billion and our net debt to EBITDA from 1.7x to 0.3x as of year-end. Our business has generated strong cash flow in the current gold price environment. And with the term loan now fully repaid, we are well positioned to consider additional return of capital to our shareholders. We are in the process of renewing our NCIB and based on recent gold prices, we expect to initiate a share buyback program later this year. As typical for us, we expect Q1 to be a cash outflow quarter in addition to the $200 million term loan repayment that we made in February.

We also have our annual income tax payments in Brazil and now Mauritania and our semiannual interest payments. As such, we’ll provide an update on our return of capital plans with our Q1 wells in May. Turning to our guidance and outlook. As Paul noted, we’re forecasting production in the range of 2 million ounces for 2025 remaining consistent with previous guidance. For costs, we’re guiding $1,120 per ounce for cost of sales and $1,500 per ounce for ASIC. Cost of sales and ASIC are both up approximately 10% compared with 2024. The expected increase is driven by 3 factors, which mainly include structural changes to our portfolio this year. First, production guidance of 2 million ounces relative to 2.1 million ounces last year, resulting in a denominator impact on our fixed costs and on sustaining capital in the [ case ] of all-in sustaining costs.

Second, the lower planned contribution from [ cases ] this year, we will see a smaller benefit from our lowest cost mines. Last, modest overall cost inflation of 3% to 4%. Our capital expenditure guidance of $1.15 billion for 2025 reflects annual [indiscernible] and planned higher capital spend as we continue to advance Great Bear. Approximately [ $650 million ] of our total CapEx expected to be nonsustaining. Looking ahead to 2026, our production guidance of 2 million ounces remains unchanged from our guidance update last year. Beyond 2026, we have introduced another year of production guidance of 2 million ounces for 2027, in line with 2025 and 2026. [indiscernible] to ongoing inflation, attributable CapEx is expected to be consistent in 2026 and 2027 in order to continue to bring projects within our pipeline into production.

I’ll now turn the call over to Claude to discuss our operations.

Claude J. Schimper: Thank you, Andrea. In the fourth quarter, we officially launched our Health and Safety brand called Safe Ground and commenced work on establishing Safe Ground leadership development programs that will be tailored and delivered to 4 specific groups: executives, managers, frontline supervisors and operators. In 2024, our operations delivered on our full year production and cost guidance. And we are encouraged to see [indiscernible] operational excellence, continue to drive strong results from our operations. Production of 501,000 ounces in the fourth quarter as planned. Starting with Tasiast, the mine delivered a record throughput, production and cash flow. Record full year production of 622,000 ounces at an impressive cost of sales of $681 per ounce drove record free cash flow from our lowest cost operation.

In the fourth quarter, Tasiast has delivered production of 139,000 ounces at a cost of sales of $725 an ounce. Production was lower over the prior quarter due to a planned reduction in grade. Production and [indiscernible] is expected to be lower in 2025 as mine continues transitioning into lower grades. Tasiast is expected to [indiscernible] 500,000 ounces with the target cost of sales of $860 per ounce and is expected to be our lowest cost operation once again this year. Paracatu delivered another strong year with production of 529,000 ounces exceeded midpoint of guidance and the cost of sales of $1,039 per ounce, which was below the midpoint of guidance. As planned, mine sequencing continued to transition into higher grades in the fourth quarter.

Production of 124,000 ounces was low over the prior quarter as stronger grades were offset by lower throughput resulting from the timing of some mill maintenance and mine sequencing. [indiscernible] Paracatu is expected to be higher and costs lower this year as mining continues within the higher grade portion of the pit. Paracatu is expected to produce 585,000 ounces at a cost of sales of $1,025 per ounce in 2025. At La Coipa, fourth quarter production of approximately 59,000 ounces improved over the prior quarter on stronger mill throughput, which offset lower grades. Full year production of 246,000 ounces was in line with guidance. The site team continues to manage throughput while long-term mill optimization initiatives are being implemented.

La Coipa anticipated to produce 230,000 ounces at a cost of sales of $1,060 per ounce in 2025. Moving to our U.S. operations. Production was stronger in the second half of the year as expected, following the start of production from Manh Choh early in the third quarter. Collectively, the U.S. site delivered full year production of 731,000 ounces at a cost of sales $1,313 per ounce, which was in line with guidance. Production of 179,000 ounces in the final quarter was on plan. In Alaska, fourth quarter production of 92,000 ounces was lower compared to the prior quarter and cost of sales of $1,320 per ounce was higher due to the timing of the processing of Manh Choh wall. At Bald Mountain, we produced 45,000 ounces and a cost of sales of $1,144 per ounce.

And production was in line over the prior quarter, while costs were slightly lower due to the timing of sales. At Round Mountain, production of 3,000 ounces was in line compared to the prior quarter. Cost of sales of $1,764 per ounce was higher due to the accounting of higher cost ounces from the leach pads. Mining at the Phase X remains on schedule with initial production expected to begin in the second half of the year. With that, I’ll now pass the call over to William to discuss our projects.

William Dunford: Thanks, Claude. We’ve just released our annual reserve and resource. So I’d like to start out by providing that update and then I’ll discuss the growth projects that sit in our resource and underpin our potential future production profile. We are currently in a phase where we are focused on drilling and developing our earlier stage, higher-grade growth projects like Great Bear, Phase X, Lobo-Marte and Curlew. As a result, the majority of our additions this year came in the inferred category where we saw a [ $2.7 ] million increase. We did also see some additions in the M&I category, which were largely offset by conversion of 1 million ounces out of M&I into reserve at Bald Mountain. We have updated our reserve and resource gold price assumptions from 1,400 to 1,600 and from 1,700 to 2,000 respectively.

The intention of this was to be more reflective of the current gold price environment. The increase in our gold price, working on balanced approach and our objective was not to drop cut-off grades to grow resources. Instead, we are focused on margin and quality of our resource additions to extend our mine lives and bring on higher-grade growth projects, as you can see by the overall increase in resource grade. To that end, you can see on this slide an overview of the significant resource optionality for both mine life extensions at our existing mines and new production from growth projects. With 26 million ounces in M&I and another 13 million ounces in inferred. These resources form the pipeline of potential opportunities that we are progressing to support our production profile through the end of the decade and into the 2030s.

This slide gives an indication of the level of study of these opportunities. We have our base case, which includes reserves and already approved projects and provides the production in our guidance window through 2027. Second, we have several growth projects at an advanced stage of study that offer potential to add production both through the end of the decade and beyond into the [indiscernible]. And third, we have several opportunities within our project pipeline that are at an earlier stage of study and offer potential to contribute to our 2030 production profile. We remain excited about our internal prospects which are further augmented by today’s strong gold price, and we will continue to maintain a disciplined approach to progressing these projects into our production profile with a focus on margin and return.

Bald Mountain offers a recent example of bringing these pipeline opportunities into our production profile. In mid-2024, we received our permits for the Juniper package and on the back of this, we have converted approximately 1 million ounces of resource to reserve in the Red Bird pit. We have split Red Bird into 2 phases. We have approved and already started mining Phase 1, which contains 270,000 ounces and will take production into 2028. Phase 2, containing approximately 690,000 ounces of M&I could begin in 2026 and extend production from Bald Mountain through 2031. This phased approach lowers the initial CapEx and risk and pulls forward earlier production from Phase 1 into 2027, while we continue to optimize our desired execution plan for Phase 2.

The initial CapEx of 120 million for Phase 1 is primarily pre-stripping costs as Phase 1 leverages the existing leach pad capacity, thereby minimizing our initial capital risk. Project has an all-in sustaining cost of $1,500 per ounce and a strong return at today’s gold price. We also continue to focus on additional optionality at Bald Mountain outside of Red Bird, including looking at small satellite pit opportunities that could be combined with Red Bird 2. At Tasiast, we have completed a new mine plan on the back of the 2024 reserve update. As the [indiscernible] over the next 3 years, [indiscernible] is expected to be lower, driven by mine plan sequencing and lower mill grades as we focus on stripping and with franchise. It has been a focus for the Tasiast team to increase production in the ’25 through ’27 window through operational improvements, design optimizations and unlocking satellite opportunities.

This work has added approximately 100,000 ounces over this 3-year period as compared to the mine plan update we provided in 2023. Optimization at Tasiast is ongoing with additional [ sale ] opportunities being evaluated. Studies to explore underground potential are also progressing with recent drilling at [ West Branch ] intersecting wide mineralization, 700 meters down [ tone ] of the existing resource. Moving from our operations to our growth projects. The Curlew team has been successful in adding high-quality resources over the last couple of years, further enhancing the potential of the project. As part of our year-end resource update, we are pleased to report a high-grade resource addition at Curlew. This is an addition of 125,000 ounces at 9 grams per tonne in the [ cell-cell ], which continues to be open both along strike and [indiscernible].

Not only are we seeing strong grades in the cell, but it’s also coming in at a very minable width averaging just over 5 meters. This focus on high-grade extension [ health ] will continue in 2025 with an expanded drill program target further extensions at depth. Now shifting focus to Phase X where development and drilling continues to progress well. We have now expanded drilling into the upper zone of the exploration target and you can see the results continue to support our thesis of a bulk underground operation in the range of 3 to 4 [indiscernible] time, providing potential for higher-margin supplemental production at Round Mountain. In 2025, we will be completing our initial infill drilling program at Phase X, and we anticipate the release of an initial underground resource with our ’25 year-end resource update.

At Great Bear, early works construction for advanced exploration commenced in November. As can be seen on the slide, tree clearing is now complete, [ first ] quarter excavation for the exploration infrastructure has commenced. We are excited to have broken ground and are focused on pressing civil works and permitting over the coming quarters to allow us to start the exploration decline later this year. Moving to the broader exploration update. Our team had another strong campaign in 2024 with approximately 320 kilometers of drilling completed across [ MinEx ] Brownfields and Greenfields. As detailed in our press release, this program produced notable results across several locations. We provided an update on prepared back in September, highlighting the successful addition of over 500,000 ounces of high-grade inferred resource net debt and the strong results of our PEA.

We also highlighted the drilling at depth below the PEA inventory and resource that demonstrates the significant upside potential for further resource additions. Following the success of this 2024 drilling and the results of the PEA, we’ve shifted our focus on at Great Bear to regional exploration on the 120 square kilometer land package. We’ve already provided updates on Curlew and Phase X, so I will move on to our other U.S. assets. At Fort Knox, the program focused on 2 main areas: growth around the Fort Knox pit around the [ Gilat ]. We saw some good intercepts across both areas, indicating potential for additional mill feed and this work will be followed up on in 2025. At Bald Mountain, with near-term mine extensions established through the approval of Red Bird 1, the 2025 exploration campaign will focus on conversion of the inferred resource in Red Bird 2 and on generative projects.

At Tasiast, we added 110,000 ounces to reserves in 2024 through the addition of the [ FENICS ] satellite pit. Exploration in 2025 will focus on further expanding mineralization at the underground target and drilling additional satellite pit opportunities on the wider land package. Moving to Chile. Our Brownfields program further delineated porphyry mineralization. In 2025, we will follow up on these results and also address exploration of known trends on [indiscernible] a license. In Brazil, our Brownfield program focused to testing targets along the Northwest corridor from Paracatu, with results showing similar style and grade of mineralization to the Paracatu deposit. Moving to our Greenfield program. Approximately 45 kilometers of drilling was completed on targets located in Canada, the U.S. and Finland.

In Manitoba, our drilling is [indiscernible] continue to define high-grade share-hosted vein systems. And in 2025, we will focus on increasing the critical mass of mineralization to support further work. In Nevada, drilling was completed across several prospective properties with the potential for Curlew and low-sulfidation gold mineralization. This drilling included an initial diamond drill hole, the PWC JV project in September which successfully intersected lower plate carbonates associated with [indiscernible] district at [ DAP ]. In Finland, we progressed both basic till drilling for target delineation and follow-up diamond drilling, which shows some high-grade [ INTERCEPT ] at Long East. In Finland, we will follow up on these successes in 2025 and continue our exploration of this underexplored Greenstone Belt.

Overall, we are in [indiscernible] with our success identifying and progressing earlier-stage opportunities, such as Phase X, Curlew and Great Bear. I will now turn it back to Paul for closing remarks.

J. Rollinson: Thanks, Will. After delivering on our commitments in 2024, we are well positioned for a successful 2025. Our business is in great shape both operation and financially with a number of key milestones for the year ahead, including repayment of our term loan, restripping at Red Bird, advancing permitting across Great Bear, Curlew, La Coipa and Lobo-Marte, advancing exploration decline infrastructure at Great Bear, restating our share buyback plan, initial production from Phase X, satellite mining at [ fine ] and an anticipated year-end resource at Phase X. In summary, we are excited about our future. We have a strong production profile. We are generating significant free cash flow, we have an excellent balance sheet, we have an attractive dividend and plan on returning additional capital, we have an exciting pipeline of both exploration and development opportunities.

We’re 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.

Operator: And we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Mike Parkin with National Bank.

Q&A Session

Michael Parkin: Great presentation, really like Slide 20 and 21 there in terms of all the upside you’ve got that you’re working on so looking forward to updates there. Just a question on Kinross the task operation in the fourth quarter. How many days was [indiscernible]?

Claude J. Schimper: Mike, it’s Claude. Yes. We did [ extend ] down for about 4 to 5 days. We did some relining stuff and changing some wells and things so we’re right online. And from a production point of view, because we entered into the lower-grade section which was in anticipation of this year going forward, we still maintained our throughput average for the quarter.

Michael Parkin: Yes, that’s what I was kind of getting at [indiscernible] what I adjust for that, on 87 operating days your are over 25,000 tonnes per day. So that’s like the second consecutive quarter you’re not quite 10% above nameplate, but consistently kind of hitting above the target. What’s kind of driving that? Is that just you’ve got some spare capacity in the front of the circuit that you’re utilizing? And do you see that kind of continuing going forward? And what was the baseline assumption just throughput quick guidance?

Unknown Executive: Mike, all of that is as planned. In order to do an average of 24,000 a day, you need to do some day at 26,000, 27,000. So we’re well within the nameplate. It’s really just about our ability to use our CI initiatives and all of these things to have more and longer extended runs at a higher rate. So we had a tremendous quarter in terms of throughput. And as we [indiscernible] I don’t know [indiscernible] Slightly down. But we’re well set up, and we’ve started the year very strongly as well now. given that we’ve taken the opportunity to maintain we could.

Michael Parkin: Okay. And in terms of the limiting factor there is, are you more mill constrained or pick constraints in terms of getting or either end of the pit or through the mill?

Unknown Executive: And I think the ultimate constraint is the plant because we’ve got some stockpiles and as we manage through from Phase 4 at the bottom of the pit now going to Phase 5 stripping, we will balance production through stockpiles and mine performance. Ultimately, we’ve designed this plan to run an average of 24,000. They will be done that we averaged slightly above that and other times slightly below it. We’re has come along a strong after some tough years, and we’re pushing the boundaries and the limits and we constantly learn more about the plant and our certain things behave. And it will be a balance [indiscernible] so we maintain our recovery levels. I don’t push the tone to hard to then start reading on recovery.

Michael Parkin: And then switching over to the exploration side of things in the reserve resources. The underground at Round Mountain, you keep hitting these really high-grade structures. How is that being kind of captured in the reported reserves and resources with respect to where is your capping brand grade — just kind of…

Unknown Executive: We don’t have.

Michael Parkin: To understand what you’re reporting versus like what you’re kind of realizing at the drill bit.

Unknown Executive: Yes. We don’t have an underground reserve or resource at Phase X that Round Mountain yet, the resources on the book and reserves are all open pit. We’re hoping after the infill drilling that we’re doing now. That’s the reason we’re doing it is to get an initial under resource out at the end of the year this year with our annual update.

Michael Parkin: And I think…

Unknown Executive: [indiscernible].

Michael Parkin: Okay. Yes, because you got — I think I remember you guys guided the market to kind of 3 to 4 grams historically in terms of where underground could kind of shape up? Is that the feeling that’s maybe a bit conservative on the consistent really good results you’re putting it in the market on that?

Unknown Executive: I don’t want to get ahead of ourselves, and that is why we’re doing the infill drilling. And you can see on Slide 25, it will be released that we’ve got a pretty extensive table on the right-hand side, that shows all of the drilling in that over right portion of the exploration target. And you can see there, both the wider intervals and the better intervals with the higher-grade highlights. We want to get the bigger resource, and we want to get the bulkier deposits. So you can see a more representative idea of the grade in those wider intervals. And we do still see it being in that 3 to 4-gram per tonne range. That’s ultimately how we’re going to maximize the economics of this is by going to bulk mining with these pretty-pretty exceptional wide zones.

Michael Parkin: Okay. We’re looking forward to the update.

Operator: And your next question comes from the line of Anita Soni with CIBC.

Anita Soni: Congratulations to the whole team on a very successful year on many fronts. And I agree with Mike on that Slides 20 and 21. It’s good to see those slides again, especially from companies with a track record of actually acting on what they say they will do. A question on the Red Bird additions. On the Phase 2, could you give us an idea of what additional [indiscernible] impact would be needed to get that additional 700,000 ounces in?

Unknown Executive: Yes. We’re still working on Phase 2. That’s why we’ve approved Phase 1. The main benefit of — well, one of the many benefits of Phase 1 is that the Phase 1 cash flow that comes from those early ounces, is intended to pay the majority of the CapEx for Phase 2 to keep that site relatively cash flow neutral as it strips Phase 2. So we didn’t have an exact sense of the CapEx yet, do we need to complete our work. But that’s the idea is to try and keep current gold prices above 0 as we strip Phase 2.

Anita Soni: Okay. And then just a question for a finance team and Paul. Just wondering when it comes to the share buybacks that you were talking about in the second half of the year, is it just basically kind of getting through the cash outflow that you’re expecting in Q1 and then [ coal ] prices stay where they are you can start executing on that in Q2? Or is it more a back half of the year?

J. Rollinson: No, I think that’s exactly as you described it, Anita. Again, from a perspective, we have — we have been consistent with our capital allocation philosophy. As we say all the time, it’s needs of the business, needs of the balance sheet, return of capital to shareholders. We did, of course, repay the debt. That was our priority in ’24. But as Andrea said, on the cash we’ve built up here while we’ve been paying down debt, we’re about to pay a bunch of that out as we do seasonally in Q1. And we want to — we want to get through that kind of get our cash back up. Hopefully, we’re still in the same kind of gold price environment, and we think that is the right time to be thinking about turning back on the buyback.

Anita Soni: Okay. Another question just on a big picture, I guess, great there, and I’m just wondering if you’ve seen any on the permitting front, have you seen any change in the government standpoint in terms of how motivated they are to get the permit [indiscernible]?

J. Rollinson: Yes. Look, I mean, I think it’s a safe assumption that when there’s an election, things kind of slow down in terms of the bureaucrats. But I’ll get Jeff to kind of spend on it. He’s on the front line of that one.

Geoffrey P. Gold: Thanks, Paul. Yes. No, Paul’s right is a practical matter. There is a little bit of a slowdown, but we’ve spent a lot of time both provincially and [indiscernible] connected with the regulators and building relationships there. And as a result, those permits will continue to advance. And we’re still expecting to get the remaining permits that we require without the way.

Anita Soni: Okay. And then roughly, I just wanted to ask on Fort Knox, Manh Choh. There’s a bit of variability in the tonnage that’s coming through. I understand some of it has to do with the weight restrictions and winter and, I believe, ice and the way why I could be wrong about that, but I just wanted to get an idea of what the standard kind of [ tonnage ] that you would expect out of Manh Choh would be, and those are pretty good grades this past quarter as well. So I just want to comment on that.

Unknown Executive: Yes Anita, you’re correct. As we go through seasonal things in the north, we end up with different load restrictions. We also have one low restriction that came after the feasibility study that we had to adjust for and given the balanced number of trips on a daily basis, but we expect to do an average of 200,000 to 220,000 factors when we do Manh Choh because as you can appreciate, we switched from very low grader [indiscernible], the high-grade Manh Choh and then back to Fort Knox. Our average is about 220,000 [indiscernible] and we expect to maintain sort of 1 quarter to update it.

Anita Soni: Sorry. So 220,000 tons per quarter or — and you batched the shipments? Okay. All right.

Operator: And your next question comes from the line of Josh Wolfson with RBC Capital Markets.

Joshua Wolfson: On the capital returns program, I understand the motivation to act maybe a bit conservatively repay the debt, wait for some higher cash flow periods. Just wondering how the team is going to be evaluating the buyback in the context of how the share prices before it’s been a phenomenal year-to-date, nominal year-over-year is that going to influence the quantum of the buyback? Or is it going to be a more mechanical or formulaic process?

J. Rollinson: Yes, I’ll take that. And Andrea, feel free to jump in, good question. Look, I think it’s all about the right balance. I mean, number one, we still see our shares as undervalued. We also — we’ll think about that in the context of spot. So you can look at our valuation share price in the sense of consensus. The consensus gold price, you can also look at it in the context of [indiscernible]. And in both cases, we believe we’re undervalued. Having said that, it’s not lost on me or us that here we are, record gold prices, really good share prices. Is this the kind to be buying back your shares? We still think it is, but I think it requires balance and focus, and that’s how we’re coming at it. We’ll be thinking about it in those terms, it won’t be just necessarily an automatic formula.

Joshua Wolfson: Go it. And then one other question on the tax guidance that was issued. Should we be assuming going forward, I guess, full tax rates at both Tasiast and [ equip ] the number seems to have gone up year-over-year, and I just want to make sure that it’s maybe a combination of maybe capital being repaid as well as gold prices having increased.

Andrea Freeborough: Yes, it is both, Josh. So starting with Mauritania, we — 2024 was the first year that we became income taxable in Mauritania. So if we look at the tax — cash tax guidance, about 200 million of it is payments that we’ll actually make in Q1 that are related to 2024. So yes, that is both Mauritania coming in as well as higher gold price impacting Brazil and Chile, where we’re also paying more significant taxes. And then the rest of that guidance is just tax installments that we expect to pay throughout 2025.

Joshua Wolfson: Got it. And sorry, just to clarify for tax issue, should we be assuming the full corporate tax rate of 25%? Or is there a just low tax year versus steady state?

Andrea Freeborough: No, it’s to normal tax, tax [indiscernible].

Operator: And your next question [indiscernible].

Unknown Executive: [indiscernible] Okay.

Operator: Sorry, go ahead.

Unknown Executive: [indiscernible] questions.

Operator: And your next question comes from the line of Carey MacRury with Canaccord Genuity.

Carey MacRury: Just maybe back on capital allocation. I know there’s more details to come there. But just in terms of the cash balance, are you guys thinking about build up a cash balance to have a Great Bear? Is there a minimum cash balance that you want to maintain? And I guess the second question is the term loan is gone, there’s no debt due till 2027. Just broadly speaking in terms of debt, are you comfortable with maintaining that debt, i.e., kind of keeping that leverage going forward? Or would you even consider repaying debt down in the future?

Andrea Freeborough: Sure. Thanks, Carey. I’ll start with the debt part, you start hitting it right always we look forward to 2027, and note of the next maturity. And we do plan, we would like to repay those notes. So that’s kind of back of our mind as we think about the cash balance. And so if we think about what we’ll allocate to share buybacks, we’re balancing as we always do, needs of the business. So that’s the CapEx going forward for this year. And then with an eye to the balance sheet, again, was in the back of our mind that we want to make sure we can repay those 2027 notes. And then balancing that with additional return of capital. So that’s sort of how we’re thinking about it. Our cash balance was a bit higher at the end of the year.

But as Paul noted, some of that a lot of that gets paid out in Q1 with the $200 million we paid to finish repayments on the term loan as well as the tax payments and with less interest payments in Q1. So we’d like to get back to where we started the year and then we’ll look at allocating some of the excess cash in the form of buybacks.

Carey MacRury: Okay. Great. And then maybe just a mechanical question. But just in terms of the quarterly sequence of production, you did 500,000 ounces in the quarter, 2 million ounces as the guidance, should we be expecting relatively consistent production through the year? Or is there a sort of seasonality that we should consider?

Andrea Freeborough: It’s relatively even consistent as we look out to this year.

Carey MacRury: Okay. And then maybe just one last one on La Coipa. You mentioned permitting and some laybacks. Just wondering if you could give us a bit of color on what that potentially leads to?

Unknown Executive: Yes. We’ve got our current [indiscernible] on the reserves. It takes us through 2027 in terms of the mine. And then the permitting that was discussed there in the press release is really just for further extensions of the open pit there. We’ve got additional oxide that’s very similar to what we’ve been doing. So kind of steady as she goes, but there is some permitting required as a part of that to bring that in through the end of the decade.

Carey MacRury: So potential to take it to like [ 2030 ]?

Unknown Executive: Yes. Yes, those all done, I guess, gold price, but those should be able to take us at least through 2030. We do have a meaningful inventory [indiscernible], you can see it on our resource statement. So we potentially could go beyond that.

Carey MacRury: Okay. Great. And maybe one last quick one. You mentioned the Tasiast new mine plan. Should we be expecting a 43-101 report or no?

Unknown Executive: Yes. We’ll most likely update that [indiscernible] that report with our [ AI ] this year.

Operator: And your next question comes from the line of Lawson Winder with Bank of America.

Lawson Winder: Thank you, operator. Good morning guys. Nice update. Wanted to ask about your commentary on exploration at La Coipa. I just get a sense in terms of your optimism around the ability to add to resources there. Is that something we could expect to potentially see as soon as 2025?

Unknown Executive: Yes. It’s — I mean our focus there really is we already have the resources on the books to carry us through 2030. So we’re not massively focused on expanding a lot beyond that as [indiscernible] there is a lot of good targets. That’s a pretty prolific ground out there. We have a variety of historic sets in the area. So we have mentioned we will be doing some testing around some of those pits looking for lower strip, higher margin kind of pushback in those [indiscernible]. So there’s a lot of exploration potential. But as you saw this year, our real focus right now is drilling off these new growth projects that are coming in at the higher grade to support pulling those ultimately into our production profile and reserves but we will do some exploration of La Coipa as well.

J. Rollinson: And I’ll just jump in on that. I mean part of the consideration in that part of Chile where we’re operating Region 3 out of [ Camas ] water. And we have existing permitted pumping water wells, that’s in [indiscernible], but we want to think about La Coipa’s future and also Lobo-Marte, which we’re advancing. So we’re trying to find the right balance between continuing to grow resources and to bring [indiscernible] online towards the end of the [indiscernible] and working with that our existing water permits.

Lawson Winder: That’s perfect to address my follow-up question. And then I would like to also just ask again about capital return and your thoughts on the dividend level, which is I think, abundantly sustainable at the current level and potentially sustainable at a higher level. Is that something you’re also considering?

J. Rollinson: Yes. What I think we just want to be careful. We want to be balanced. There was a question earlier, it doesn’t make sense at the share price. We think it does, given our relative value and as I said, needs of the business, we’re well maintained. We keep a well-capitalized business, which we believe reduces operating risk. We focused on paying down the term loan. We’ve just completed that cash [indiscernible] quarter. We want to kind of strengthen the balance sheet again. So needs of the business, needs of the balance sheet, and then we should be in great shape to see where we are in the current — in that environment as we look out to the second quarter as to what the appropriate — what feels like the appropriate kind of proportion of free cash flow to allocate to the buyback.

Lawson Winder: So if I’m hearing your answer, the preferences buyback over dividend. Is that correct?

J. Rollinson: That’s correct.

Lawson Winder: Great. Thank you very much.

Operator: [Operator Instructions] And your next question comes from the line of Tanya Jakusconek with Scotiabank.

Tanya Jakusconek: Congrats on making your guidance for 2024. Just wanted to go back to maybe, Claude, can you — on the sequencing of your mine plans through 2025. Can you just remind me major shutdowns, if any, are at any of your operations? I’m trying to [indiscernible] like the seasonality that at Fort Knox. So I’m just trying in the wet season in Brazil. So I’m just trying to see when your downtimes are any of your other operations?

Claude J. Schimper: Tanya, for the last couple of years, we’ve been working towards flattening that staggered [indiscernible] type performances through scheduling and maintenance activities in a way that they are more a part of the process. We don’t have major upgrades and shutdowns in any of the sites now. And so it’s typical more maintenance. Some of them will have 4 day shutdowns to do reliners and Paracatu a couple more days depending on which — whether it’s a [indiscernible]. So we’re managing that and to Andrea’s point early on, this is the year where we actually got the tightest range between every single quarter, and we’re going to manage that and manage our performance of each of those sites accordingly.

Tanya Jakusconek: Okay. That’s good here. And maybe Andrea, just you didn’t answer the question on what cash you think you need to hold on the balance sheet to run this 2 million-ounce business?

Andrea Freeborough: It’s — I mean, typically, we’ve had — when you look back over the last number of years, our [ at ] cash balance is above 500 million. So that’s where we typically like to be. And some of that is just efficiently moving cash around the world.

J. Rollinson: At the minimum.

Andrea Freeborough: At a minimum.

J. Rollinson: Right? But again, we are thinking about the future. We are thinking about those notes. And again, Tanya, we’re going to look for the right balance, if you will, on free cash flow is to return and continuing to strengthen the balance sheet.

Tanya Jakusconek: No, yes. I appreciate that. Just wondered what that — what you would feel comfortable on holding just for a 2 million-ounce business. If I could just continue maybe to actually, Paul, for you. Just looking and listening to, and thank you for that slide on Page 20, about your 2 million-ounce production profile until the end of the decade. I think that would assume you have La Coipa in those additional pit laybacks or whatever that gets you to the end of 2030 at the end of the decade. When do you have Curlew in? Like is that a ’28, could we hit in? And remember, once conference call will be about under [ 1,000 ] ounces, is that still feasible?

J. Rollinson: Yes. No, I think you’re right in the zone there, Tanya. When people have asked us in the past about how we will maintain the 2 million ounces towards the end of the decade, I basically say there’s 4 things, 2 of which we just keep doing what we’re doing, that’s — we keep mining at the La Coipa, we keep mining at Bald Mountain. So that’s the 2 that we keep doing. And there’ll be 2 other things that are new that we have [indiscernible] and that is purely in Phase X. And as you’ve seen with the results of the drilling, they’re moving along very nicely. We’re really happy with how they’re going. Will why don’t you talk a little bit about timing and how those come in.

William Dunford: Yes. I think you can see we’ve been expanding that resource currently in a very positive way, which is the goal a couple of years ago, and we’ve gone at that point where we’re more comfortable on the economics and then the margins turn. There is one remaining permitting action that we’ve spoken about before, which is really just getting the permit to increase the height of the tailings storage facility when we [indiscernible] stack tailings. The rest of our permits are in place. So that is a bit of a milestone permit in terms of controlling time line. After that, we’ve already — we’re already at the ore body underground. We’re already in a pretty good position to get into development fairly quickly. So we do — we haven’t released specific guidance yet, but 2028, it’s a reasonable assumption on how we’re going through that permitting and construction path.

Tanya Jakusconek: Okay. And then how do you think about the external opportunities versus your internal opportunities? You’ve got a lot for mine life extension. And then obviously, we’ve got Lobo-Marte, Maricunga, Great Bear are all coming in towards the end of the decade and into the 2030s. How do you look at your — evaluate external opportunities, would you say you’re more focused on production versus development?

J. Rollinson: Look, I think the key here is we don’t feel under pressure to go out and do anything necessarily to gain production immediately. We’re very happy with our internal pipeline portfolio. That allows us to be patient and really look for value, whether it’s in an earlier stage or in production. When I get the M&A question, which you get a lot, I mean, I think the history speaks a lot for the demonstrated in terms of discipline. I mean, really, if you go back and you look at what acquisitions have we done in the last 10 years, there’s maybe 3 or 4. We did the Round Mountain ball back in 2015, bolt-on synergistic, we purchased some power plants in Brazil in 2018, Manh Choh in [indiscernible] in 2020. So we’re very careful.

We do look at external opportunities, but we have to see the value proposition. And if we do, we’ll move forward. But it’s challenging sometimes to find those value opportunities. Great Bear obviously, was the last time we did an external that was — we purchased that in ’22, and we’re extremely pleased. So we’d love to find more of those if they exist, but we’re not feeling under pressure to go out and do something just for the sake of maybe getting higher production.

Tanya Jakusconek: I appreciate that. I just wondered if you thought there’s opportunities for you to add additional inventory like beyond 2030, whether that made sounds for you.

J. Rollinson: Yes. Look, I think when I — I sometimes get the question, no I’m not or say worried about towards the end of the decade, when I’m thinking about the future of the company, we are, we’re thinking about mid-30s and beyond. And so that’s kind of the time line we’re thinking about. So yes, if there’s good opportunities to add, we think, is quality to the inventory, we’ll look at it. it’s quality. And again, I would say one of the advantages we’ve had over the last few years in terms of our cost structure is a lot of the new stuff that we have brought on and some of this is internal, whether it was the restart of La Coipa or the ramping up of the mill of Tasiast, we’ve been bringing on quality, meaning better grades and those better grades have driven our margins. Would just be a natural offset some of the cost pressures that maybe some others have faced.

Tanya Jakusconek: Okay. If I could just squeeze one question in for Jeff. Can you just give me an update on the 2 remaining permits that we require on the [ AET ] program? And negotiations with First Nations. We [indiscernible] how that’s going and what’s the time line of getting all that?

Geoffrey P. Gold: Sure. [indiscernible], we’ll start with your [ AX ] question, if that’s okay. The 2 remaining parts that you’re referring to. One is what we refer to as in industrial sewage treatment and construction print, which we call an ECA, which stands for Environmental Compliance Approval. And we don’t obviously need that today, but we’re targeting to get that sort of later in the spring. And the second outstanding permit is our operations permit to take water, which again, we don’t require today, but we’re targeting the back half of 2025 later 2024 for that particular permit. We have to be clear, we have every single we need for our current [indiscernible] activities and have received for those permits to date. One on the First Nation’s question that you asked about relations there are very strong.

I won’t go into a lot of detail on that one, but we are in the best of negotiations with them on our project agreement or what’s more commonly called an IVA. We’ve exchanged drafts. We’ve had economic discussions that’s going. And we’re sort of targeting the back half of 2025 to get something done there. And last but not least, obviously, on the main project, we’re in the midst of our federal permitting process there, which involves the filing of what we call an impact statement. And again, we’re targeting the back half of 2025 to get that done. Does that answer your questions, Tanya?

Tanya Jakusconek: Just on the negotiation with First Nations, would it be safe to assume that all the negotiations are just sort of the normal and classic items that are being done in other mining areas in the Red Lake District, let’s say, that are normal to what’s been already [indiscernible]?

Geoffrey P. Gold: Yes. Yes. Yes. Yes, we — there isn’t — we’re not sort of trailblazing here where you would expect to see the customary provisions that you would typically see in an IVA and we’re discussing those in our negotiations.

Operator: And there are no further questions at this time. I would like to turn it back to Paul Rollinson for closing remarks.

J. Rollinson: [indiscernible].Thanks, operator. Thanks, everyone, for dialing in this morning. We look forward to catching up with you all in person in the coming weeks and months. Thank you.

Operator: Thank you presenters. And ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.