Kinross Gold Corporation Q2 FY2025 earnings call

• Strong Q2 Performance: Produced 513,000 ounces, cost of sales $1,074 per ounce, record operating margins and free cash flow of almost $650 million in Q2.
• Operations Update: Paracatu and Tasiast were top producers. La Coipa, U.S. assets, Alaska, and Nevada projects had progress; Redbird Phase 1 at Bald Mountain and Phase S at Round Mountain had advancements.
• Sustainability: Annual sustainability report published, progress in water management initiatives at La Coipa and fish population thriving at Fish Creek in Alaska.
• Resource Optionality: Brownfields (Curlew, Phase X) and greenfields (Great Bear, Lobo) projects advanced with exploration updates and technical studies ongoing.

In the second quarter, Paracatu produced 149,000 ounces with a cost of sales of $958 per ounce and contributed significantly to cash flow. Tasiast delivered 119,000 ounces at a cost of sales of $843 per ounce, on track to meet full-year guidance. La Coipa produced 54,000 ounces at a cost of sales of $1,397 per ounce, impacted by groundwater but on track for full-year guidance. U.S. operations produced 190,000 ounces at a cost of sales of $1,229 per ounce, with Fort Knox, Bald Mountain, and Round Mountain having specific production and cost details.

• Full-year production guidance: 2 million ounces at a cost of sales of $1,120 per ounce and all-in sustaining cost of $1,500 per ounce.
• Second half production: Expected to be ~500,000 ounces each quarter.
• Capital expenditures: On track for $1.15 billion, with more sustaining than growth in the second half.

• Factors leading to actual results differing from estimates, as detailed in the presentation, news release, MD&A, and AIF available on the company's website.

Q: Can you remind us how to think about the second half at Bald Mountain?

A: The second half will be slightly less than the first quarter as we continue to push on Redbird start-up, which is progressing very well.

Q: The U.S. operations as a whole, it seems like it could be trending above the midpoint of full-year guidance. Maybe just walk us through are there any offsets that we should be thinking about?

A: We expect to continue the good performance from the U.S. operations, but our second half will be slightly lower at Fort Knox as we cycle out the different production from Manh Choh and Fort Knox.

Q: Just wondering if you can give us a bit more color on what the Puren 4 layback looks like from a tonnes of ore perspective and grade and maybe strip ratio?

A: We're looking at about a little over 0.5 million ounces of resource there, and the average grade is around that 2 gram per tonne mark, potentially a little bit lower as we continue to optimize the pit there. We might have to get back to you on the exact strip ratio.

Q: You're focused on paying down the $500 million debt due in 2027. But beyond that, is there any plans to buy back any debt earlier?

A: There's always a cost associated with retiring debt early. First up is the 2027, and we expect to repay those either at or potentially before maturity. We're at net cash in Q3 and comfortable continuing to grow the cash balance.

Q: Should I be thinking then if I keep the cash in that $500 million range, anything above and beyond would go to your share buyback?

A: We're committed to the $500 million buyback and $150 million dividend, totaling $650 million of returning capital. It's gold price dependent, but we'll continue buying back shares if the gold price remains favorable.

Q: How are you thinking about your life of mine plans and your reserve and resource base given the discrepancy in pricing?

A: We're focused on margin, cash flow, value creation. We have significant optionality in our portfolio, with brownfields like Curlew and Phase X advancing, and we'll look at a range of prices for life of mine plans.

Q: Could you just give a little color on Lobo-Marte and how you see that fitting into the fold and the work you're doing there?

A: We released an FS on Lobo-Marte a few years ago, in the permitting process. It's a high-margin mine with 1.3 gram per tonne grade, low strip ratio (2:1), and will be a contributor in the 30s, going through permitting efforts.