Kinross Gold (TSX:K) Q3 2026 Earnings Call

0:00 Thank you for standing by. My name is Carly and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold Third Quarter 2026 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to David Shaver, Executive Vice President. Please go ahead.

0:44 Thank you and good morning. In the room with us today on the call, we have Paul Rollinson, CEO, and from the Kinross Senior Leadership Team, Andrea Freeborough, Bernard Wessels, Will Dunford, and Geoff 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 3 of this presentation, our news release dated October 28, 2026, the MD&A for the period ended September 30, 2026, and our most recently filed AIF, all of which are available on our website.

1:31 I will now turn the call over to Paul.

1:34 Thanks David and thank you all for joining us. This morning I will discuss our third quarter results, provide high level updates from across our portfolio, comment on our sustainability achievements, and confirm our outlook. I will then hand the call over to the team to provide further details. Before we begin discussing the quarter, in keeping with our first priorities, I would like to address a very important matter with regards to safety. We are deeply saddened by the tragic loss of two employees of business partners of our Bald Mountain operations in Nevada.

2:19 We extend our sincere condolences to their families, friends, and colleagues. The safety of every individual at our sites is our highest priority. And we are committed to learning from these incidents and reinforcing our safety controls across our operations. Turning now to our results. Following a strong H1, our portfolio delivered on our updated commitments for the third quarter. Both Cassius and Pericatu are two top tier low cost assets. We're key contributors and together accounted for more than half of our production at a track of operating costs.

3:07 In La Coypa and Round Mountain, the two smaller assets behind the near term guidance update delivered in line with our updated expectations. In terms of cost, We continued to hold the line on total operating costs and delivered strong operating margins. All this translated to free cash flow of over $1.8 billion through the first nine months, and we ended the quarter with significant financial strength, including $2.6 billion in cash. This enabled us to increase our shareholder returns from 40 to 50% of our free cash flow.

3:54 And we have now returned over $950 million to our shareholders year to date. I am pleased to report that over the last six quarters, we have now repurchased approximately 5% of our outstanding shares. Turning now to our growth projects. Our project pipeline is advancing as we continue to make strong progress across our mine life extensions and growth opportunities. In the US, the team continues to progress our three high quality projects, Phase X, Redbird, and Curlew. At Great Bear, both the advanced exploration and the main project are advancing well.

4:45 In terms of AEX, we continue to make strong progress advancing the north and south exploration declines for a combined total of over 500 meters of underground development completed to date. With respect to the main project, both detailed engineering and permitting are advancing well, and we remain on track for first production in late 2029. In terms of permitting, we continue to work closely with the authorities and are significantly advanced on the federal and provincial permitting process. And in parallel, we are actively engaging with the local communities and indigenous partners through regular community meetings, ongoing collaboration, and transparent communication, which Geoff will comment on later.

5:46 Moving across to growth in Chile. Last quarter, we provided an updated view of Lobo Marte, highlighting its strong production profile, low cost structure, and attractive economics. And in Q3, we continued to advance permitting, detailed engineering, and execution planning towards targeted first production in the early 2030s. Turning now to a few remarks on sustainability. In Q3, we continue to make meaningful impact across our regions. Three highlights include our work with Trout Unlimited on the Cripple Creek Restoration Project in Alaska, which focused on restoring waterways and fish habitat impacted by non-Kinross historic mining.

6:43 We also supported recovery efforts following the Toke wildfire in Alaska, including emergency assistance for families whose homes were rendered uninhabitable. And in Chile, we were proud to receive the Mining Foundation of Chile's award for commitment to territories and education, recognizing our support for education, training, and opportunities in the Atacama region. Turning now to our outlook, the broader portfolio continues to perform well. Operations at La Cueva and Round Mountain have stabilized, and we are firmly on track to deliver our updated production guidance of 1.84 to 1.86 million ounces.

7:37 Looking ahead, we remain focused on the following. safe operational execution, cost management through productivity initiatives, delivering our grade enhancement strategy, maintaining our strong financial position, disciplined capital allocation, and advancement of our high quality resource base and project pipeline. With that, I'll now turn the call over to Andrea.

8:14 Thanks, Paul. I will review our financial highlights from the quarter, provide an overview of our balance sheet and return of capital, and comment on our outlook. We delivered Q3 as per our updated plan with production and cost in line and a significant amount of capital returned to shareholders through our dividend and increased share buyback plan. We produced 425,000 ounces and sold 410,000 ounces. with the difference of function of timing of ounces sold. Cost of sales was $1,485 per ounce and all in sustaining cost was $1,947 per ounce. Through the first nine months, our production cost of sales was $1,396 per ounce and our all in sustaining cost was $1,827 per ounce, both tracking well for their updated full year guidance.

9:13 Q3 margins were strong at approximately $2,750 per ounce. Our adjusted earnings were 50 cents per share in the quarter and our adjusted operating cash flow was $831 million in the quarter and over $3 billion through the first nine months. Attributable adjusted free cash flow was $391 million when excluding the impact of working capital outflows. Working capital outflows primarily reflected an increase in short-term stockpile balances at Manchot, along with lower payables and higher prepaids, all of which are a function of timing. Free cash flow was also impacted by the timing of ounces sold given the bank holiday on September 30th. The unsold ounces at the end of the quarter were sold in early October.

10:09 Turning now to our balance sheet and return of capital. We ended the quarter with $2.6 billion in cash and $1.9 billion in net cash. During the quarter, S&P upgraded our credit rating to BBB with a stable outlook, consistent with our ratings at both Moody's and Fitch. With respect to our return on capital, in September, we increased our commitment from 40% to 50% of our full-year free cash flow through both dividends and share repurchases. We believe our shares continue to represent a strong return on invested capital, considering our even more attractive valuation and free cash flow yield. In Q3, we accelerated our buyback program and repurchased a total of 8.6 million shares for $230 million.

11:01 We also continued to pay our quarterly dividend of approximately $50 million.

11:04 Combined, our total return of capital in the first nine months represented approximately 46% of our attributable free cash flow, an increase from 37% in the first half of the year. Subsequent quarter end, we repurchased an additional $100 million in shares and we remain on track to achieve our 50% commitment by the end of this year. Since resuming our share buybacks in April 2025, we've repurchased over $1.4 billion in shares representing approximately 5% of our outstanding share count. Including our dividends, we have returned over $950 million to date in 2026 and over $1.7 billion since the start of 2025.

11:53 These results reflect the strength of our cash flow generation and our ongoing commitment to delivering meaningful returns to shareholders while continuing to invest in our business and further strengthening our balance sheet. Turning now to our guidance, we remain on track to deliver our updated production cost of sales and all in sustaining cost guidance. Production is expected to be between 430 and 450,000 ounces in the fourth quarter to deliver 1.84 to 1.86 million ounces for the year. And we're on track to meet our updated cost of sales guidance of $1,420 to $1,460 per ounce and all in sustaining cost guidance and many more.

12:43 We are also on track with our original capital guidance range of $1.5 billion plus or minus 5%. Looking ahead to 2027, as noted in our September update, we also expect production in the range of 1.84 to 1.86 million ounces. In terms of 2027 capital, As previously noted, our $1.5 billion guidance range remains subject to inflation and incremental project additions to support production in the 2030s. We're actively evaluating incremental investment opportunities to unlock value from our significant resource inventory. This includes the Fort Knox Phase 11 extension and other targeted opportunities across the portfolio to add ounces and extend mine life.

13:34 Will is going to discuss these later in the call. Our annual budgeting process is underway and we will provide detailed 2027 production costs and capital guidance with our year-end results. Looking forward to 2028, our grade enhancement strategy is expected to drive higher production relative to 2027 and provide an organic offset to inflation with the addition of higher grade ounces from Phase X, Curlew, and Taskit. With that, I'll now turn the call over to Bernard.

14:09 Thank you Andrea. I'd like to begin by acknowledging the tragic loss of two business partner employees at our Ball Mountain operation in Nevada. We are deeply saddened by these incidents and our thoughts remain with their families, friends, and colleagues. As Paul noted, safety of everyone at our sites is our highest priority. Following these incidents, we help company-wide safety standouts to reflect, reinforce, and share learnings across the business. Going forward, We will maintain our relentless focus on vitality prevention and reinforce our risk management programs. We continue to be committed to visible leadership, disciplined execution, and the active management of everyone walking through our gates.

14:56 Turning now to our operations. Starting with Barricade 2, the mine continued to perform exceptionally well, with increasing ore tons mined and stronger throughput driving significant free cash flow. The production of 146,000 ounces at a cost sales of $1,202 per ounce was on plan. Baraka 2 remains on track to meet its guidance of 600,000 ounces at a target cost of sales of $1,240 per ounce. Our lowest cost operation has delivered another excellent quarter with strong throughput and mining performance. Production of 120,000 ounces at a cost of sales Thank you for joining us.

16:04 Coipa was one of the two assets impacting our near-term production in 2026 and 2027. Production was lower quarter over quarter, primarily due to unprecedented winter weather with restricted access to the ore needed to maintain our target mill feed length. This reduced mining rates and ultimately impacted mill throughput. Simultaneously, we encountered higher than expected copper trades and portions of the Sulphite ore which added blending complexity. Operations have since recovered from the weather disruptions and both mining and malaria activities have stabilized. To manage the higher copper rates and improve recoveries, we are rebuilding ore stockpiles while strengthening our ore control to maintain the right blend through the mill.

16:54 As part of continuous improvement program, we increased oxygen and lead nitrate usage and are advancing mill optimization. These actions have started to deliver results with small throughput stabilizing. And more importantly, the impact is on the near term, as the quarter provides transition to lower market, which remains the key long-term value driver for us in Chile. Turning to our U.S. operations, combined, the U.S. sites delivered production of 129,000 ounces at a cost of sales of $1,996 per ounce. And for NOx, Production was 72,000 ounces at a cost of sales of $1,938 per ounce.

17:41 Reduction reflected more maintenance activities and planned lower grades during the quarter, mostly offset by improved mold recoveries. At Gold Mountain, production was 29,000 ounces at a cost of sales of $1,616 per ounce. Reduction reflected higher funds placed on the heapage pads, partially offset by lower grades due to plant-mined sequencing. And I'm pleased to report that we bought our first gold from Redwood I in early October, which combined with Redwood II extends life into the early 20s. At Round Mountain, as planned, we started to see higher mold grades and incremental improvement in recoveries, resulting in higher production quarter over quarter.

18:30 The reduction of 27,000 ounces was higher and cost of sales $2,557 per ounce were lower. Despite higher production, it was below our original expectation and ground mountain was the second of the two smaller assets impacting our near-term production profile. This was a result of lower than planned load rates, recoveries, and slower mining rates driven by increased selective mining. Operations have started to stabilize as we continue to implement initiatives to improve performance at the downtrend. And we are noticing improvement in mill reconciliation and recovery, 60% recovery in the third quarter compared to 44% recovery in the prior quarter.

19:18 Before I hand over to Will, I would like to touch on a few other updates. In terms of weather events, we are closely monitoring the potential impacts of El Nino and preparing for different weather conditions across our South American assets. Initially, our focus is on managing increased snowfall and maintaining safe site access. While at Baraka II, we are preparing for both heavy rainfall and potential drought conditions. Our teams have detailed plans in place to support safe and reliable operations. With regards to productivity improvements, we continue to see strong results from our continuous improvement programs focused on productivity and cost discipline. Building on that work, we have launched our critical success factors initiative, which focuses each operation on a few priorities that matter most to deliver a balanced plan, clear ownership, measurable targets, and disciplined execution.

20:16 With that, I will now pass the call over to Walt.

20:20 Thanks Bernard. Turning to the depth of our resource, with more than 27 million ounces of M&I and an additional 17 million ounces of inferred, we continue to have a strong resource inventory for future development across our portfolio. Building on that depth, our technical teams are advancing studies for several mine life extension opportunities. Similar to what we saw with the three U.S. growth projects announced earlier this year, these internal projects provide significant optionality We are focused on completing robust technical work on these projects to support our capital allocation decisions, and will continue to assess margins, risks, and returns as we make investment decisions.

21:15 Turning now to our three U.S. growth projects. These projects represent an important next phase for our report. adding higher grades, lower cost production, significantly expanding mine lives, and adding value to shareholders by reinvesting in our existing operating footprint and resource base. We are pleased to report that execution is progressing well across all three projects, with development, engineering, and construction activities advancing significantly over the last quarter. Starting with our Curly project in Washington, and Tailing Sea Watering Plant Construction. At the Tailing Sea Watering Plant, work outside the building on tanks and the thickener is nearing completion ahead of winter, and work inside the building is progressing well on installation of structural steel and mechanical equipment.

22:11 The mill refurbishment contractor ramped up work substantially this quarter, demolition work progressing well and installation of the new CIL tanks underway. The main ventilation array is now complete, and construction of a new dry and admin facility is largely complete. Overall, these activities are on track for first production at Curlew in 2028. Moving to Redbird at Bald Mountains. We saw first production from Redbird 1 earlier this month, and pre-stripping and construction activities for Redbird 2 are progressing well. Engineering and procurement for the SARP plant has also progressed. detailed engineering now 30% complete and early procurement of long lead items underway.

23:00 Additionally, permitting for the Redbird 2 satellite pits was completed this quarter, putting us on track to begin lining those pits in 2027 as planned. And at the phase X project at Round Mountain, we are approximately 8% ahead of schedule on underground development, over 9,600 meters completed to date, further de-risking our paths for production in 2028. In parallel, engineering, procurement, and early works for both surface and underground infrastructure continue to progress on plan. And we continue to ramp up operations readiness, positioning the team for a smooth transition into operations as we move towards initial production. Infill drilling has also progressed for the early stoking horizons of pay debt.

23:49 and we have seen positive results indicating higher tons and ounces contained in our first soaps than what was modeled in our resource. This is driven by improved continuity of mineralization as we drill in tighter spacing, allowing us to take a bulkier soap and more ounces than planned. You can see here some impressive intercepts including 80 meters at 10 grams per ton that show potential to increase both by grade and time. and around 40,000 tons of 4 grams per ton for this particular soil. While still early, these results are encouraging, adding confidence to the initial mining inventory and supporting the time production ramp up. We also continued extensional drilling in Q2 and intersected an impressive zone of mineralization, 11.7 grams per ton over 27 meters, about 300 meters down depth of our initial resource of pay depth.

24:43 Aligned with our thesis for this deposit, This drilling continues to show potential for mineralization to continue down dip, extending the resource base and mine life. Here you can see some highlights on a few of the additional potential investment opportunities for our next phase of projects from within our resource base. First, at Fort Knox, we are continuing to advance work on the next potential open pit layback, phase 11. This layback of the existing pit contains approximately 2 million ounces and has the potential to meaningfully extend our longstanding tenure in Alaska. We view this as a lower risk project given that the majority of the capital would be for routine work for our Oridox team, including waste stripping and heat bleach pad expansions.

25:28 Study work is progressing well and we are expecting to release a project update in H1 2027 and could start pre-stripping as early as next year. At Taddeus, studies are continuing to progress on both the open pit and underground extensions bring additional ounces into the profile from opportunities such as FENIC, which was added last year. At Bald Mountain, work continues to unlock the resource base across our large land. Our current focus is on the top area, where the larger top open field pushback and smaller top condo satellites are being studied.

26:14 These opportunities could potentially further extend my life beyond Redbird in the 2030s. Lastly, at Lobo Marte, We are pleased with permanent progress to date, which is on track after our EIA was accepted for review by Chile's environmental authority in early Q2 2026. We are starting to progress detailed engineering and are in the process of project execution planning to target first production in the early 2030s. Global Marte is a strategic focus for us alongside Great Bear and a key piece of our The first phase of the optionality is the oxide extensions that sit in our resource and are currently in permitting and understaffed.

27:11 These are laybacks of existing pits, and they have the potential to start contributing in 2028 after we complete mining of the current pits through N2 and Phase 7 in 2027. Bernard spoke about some higher-than-expected copper grades that we saw at L'Exploit for this quarter. Although this negatively affected near-term production, these high-grade sulfides at the bottom of the existing oxide pits represent our second phase of optionality. On that front, we are undertaking explorations to find an inventory and a PFS to explore potential for a flotation plant to add on to the existing circuit to process high-grade sulfide. This is early stage with potential for the mid-30s post-oxide extensions.

27:58 The third phase of optionality at La Coypa is the potential for a large copper porphyry deposit deeper on the property that is feeding the large number of surface deposits that we have mined historically. This is longer-term optionality and would be a different scale of operations at La Coypa and is only in the early exploration stage right now, but each are laying underway to try to find a copper porphyry. Turning now to Great Bear. We continue to advance the AEFT program in parallel with permitting, detailed engineering, and procurement for the main project. Surface construction is now substantially complete, with all infrastructure in place to support underground development. Both declines are advancing well, with over 500 meters completed to date on a combined basis.

28:44 For the main project, manufacturing is underway on several long-lead equipment. including the mill motors, transformers, and power plant generators. We have also awarded the construction contract for the administration of the tax facility. Detailed engineering is progressing well and is now over 55% complete. We expect to substantially complete detailed engineering in the first half of next year and will provide a CapEx update on the back of that. We do expect capital to be higher than the PEA since it will reflect approximately three years of inflation, competitive contractor, and skilled labor market. of Detailed Engineering. However, given the high grade, significant production scale, and low anticipated cost of grade bear, we expect a high return and quick payback on the capital.

29:34 We are focused on building a robust, reliable, top-tier mine given the quality of the resource base and the multi-decade production potential. We are excited to now be progressing underground with ADX, seeing the future of grade bear taking shape. I will now hand it over to Geoff for an update on permitting.

29:54 Thanks, Will. As Paul noted, a permitting timeline for the main project continues to remain on track. We continue to work closely with the authorities and are significantly advanced on main project federal and provincial permitting, which I will speak a little further about. Federally, we are progressing the impact assessment process and have formally responded to the information requests received to date. As previously noted, The final decision on our impact statement is required by the late spring of 2027 in order to facilitate the early works and construction permits needed from the federal and provincial authorities to commence construction of the mine during the summer of 2027. Provincially, the integrated One Project, One Process, also known as 1P1P, permitting continues to proceed in accordance with our overall project permitting timeline.

30:48 We have submitted most of our key early works permitting applications and expect to receive our final Indigenous consultation plan shortly, another milestone of the provincial permitting process. We believe the Estonian Impact Benefits Agreement, also known as an IBA, with LAGSUL and Wabaskang First Nations will benefit the overall permitting process and is important to maintaining our project permitting timeline. In that regard, we continue to make good progress on our IBA agreement As previously disclosed, we signed a memorandum of understanding detailing the key financial arrangements and First Nations accommodations for the IBA, and we are currently in the process of advancing the non-financial aspects of the agreement, including the results of our First Nations independent impact assessment work.

31:39 Lastly, and as previously noted, we have already signed a collective benefits agreement with the Northwestern Ontario Métis community. So overall, we have made meaningful progress with our indigenous communities. And with that, I will now turn the call over to Paul for closing remarks.

31:59 Thanks, Geoff. To conclude, Q3 demonstrated the resilience of our portfolio, and we remain on track for our 2026 updated guidance. Looking forward, we are excited about our future. We have a resilient production base with a clear path to higher grade production starting in 2028. We have a competitive relative cost position. We have an excellent balance sheet. We have an attractive return of capital. We have an exciting pipeline of both exploration and development opportunities. And we are very proud of our commitment to responsible minding that continues to make us a leader in sustainability.

32:52 In closing, when we look at the strength of our portfolio, our strong free cash flow generation, and our financial position against our valuation today, we believe our shares offer an even more exceptional investment opportunity. And with that operator, I'd like to open up a line for questions. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question is from the line of Matt Murphy with BMO Capital Markets.

33:47 Morning. Thanks for all the updates and good to hear that projects are going well. First question just on the trajectory for CapEx. Is it fair to say you'll be sort of at the upper end of CapEx guide this year just based on the pace so far and is there anything you can say about the pace in 2027? I know you've got the $1.5 billion but still the... You know, subject to inflation and project advancement. Any thoughts around, you know, is the 440 rate, like, should we be continuing to run with that as sort of a quarterly cadence or could it be higher?

34:34 Hi, Matt. It's Andrea. I'll take that to the start anyways. For this year, for Q4... probably a bit of an increase in Q4 on both sustaining and growth. On sustaining, I think first half will end up being, second half will end up being about equal to first half. And it's kind of been a bit up and down through the quarters. And on the growth side, we have seen that ramp up a bit through the year just as the growth projects are ramping up. So that probably takes us somewhere in the, and many more. Thank you. Thank you. are still in the assessment process for NOx Phase 11.

35:42 If we do approve that, we'll start spending on that next year. And then there's some other potential incremental opportunities that we continue to look at that are really to address production in the 2030s.

35:57 Okay, thanks. I'll look forward to post-budgeting updates. Anything you can share on working capital, a bit of a drag in Q3, does that reverse in Q4?

36:13 I'd call it temporary. I think some of it likely reverses in Q4. It'll probably swing the other way in Q4. It's kind of typical for us. One of the big pieces in... Thank you. Thank you. Thank you. The payables and prepaids, those will reverse as we go through season four. Okay, thank you. And then I guess last, we did have a bit of additional finished goods just at the end of the quarter, and that was the sales line behind production, and that all got sold in early October.

37:23 Your next question is from the line of Fahad Tariq with Jefferies.

37:29 Hi, thanks for taking my question. On Round Mountain, it looked like it was quite a bit better than the second quarter. Mel's grades were 0.73 grams per ton. Recovery was 60%. I think the throughput was a five-quarter high. I'm just trying to reconcile that with the September update, and I guess the answer is it's lower relative to the mine plan. So maybe if you could just touch on what the expected... I guess operating metrics were according to the original pipeline. That would be helpful. Thanks.

38:02 Thank you. Bernard speaking here.

38:04 Certainly we have seen the improvements as we've mentioned in our previous release.

38:11 We're starting to see improvements both on the grades that we've seen from price is coming through as well as some of the recoveries through our improvement initiatives. I think ultimately, you know, we saw quarter-on-quarter improvements as indicated there, but we still need to get back to around 80% on recovery, and we are now targeted on achieving that. So, you know, as I said recently, you know, we're definitely seeing the updated improvements coming through and certainly the great recovery probably closer to 80% in the second part of the year.

38:56 Okay, great. And then, just switching gears to Great Bear on the AEX, can you talk a little bit about any risk to the, I guess, any First Nations pushback or permitting there, and if that does have any impact on the main project? Thanks.

39:17 Yeah, sure. I'll take that one. Just, you know, context is important here. I would say that we're really kind of got two separate permitting processes, one for AAX and one for the main project. AAX is not critical to the main project. And I would also say that AAX is not under 1P1P. which the main project is, and that's been making a huge difference to us in terms of what we're kind of seeing.

40:02 And what I would say on overall timing, main project permitting still remains on time at this date based on our project schedule, which we've shared with both the provincial and federal authorities. and then on the AAX side I would say as you know those permits have been appealed by Grassy Narrows First Nation they're seeking a leave to appeal but we wouldn't expect to see a decision on that until later next year potentially in the first half in the meantime it's been full steam ahead we've been able to We have significantly completed our AAACS activity and we're certainly not anticipating any delays at this point to our main project permitting, given there are two separate processes. And we would expect the Provincial Authorities to assess those main project permits under their own merits.

41:15 and I would also say that in that regard we've worked very closely with the authorities to ensure that we're addressing the concerns of Grassy Narrows in those permits. And last but not least, there's sort of been a lot of media about Grassy but I would say that the bigger voice here is our traditional Territory Rights Owners, Laxul and Wabaskang, on whose territory our project is located. They've been very supportive of AEX and further in support of our project overall. And we've made significant progress on our IVA agreement negotiations.

42:10 And we see that and once we've sort of completed those negotiations as being a big catalyst to facilitate the remaining permits that we require on the project. And on the IBA, as we've disclosed previously, we've sort of landed on the key financial requirements and a number of others. So we're making excellent progress there and we would expect to get that agreement signed before we receive the final IAC permit and again see that as a and the potential facilitator for the remainder of the permitting on the project.

43:15 Great. Very clear. Thank you. Your next question is from the line of Daniel Major with UBS.

43:27 Hi there. Can you hear me okay?

43:33 Yep. Sorry. Hey. And thanks for the questions. I guess the first one, thinking about the trajectory of unit costs into 2027, you've got essentially flat production and certainly external variables, energy, etc., look like there will be a consistent cost pressure. Would it be fair to assume that those unit costs are moving higher in this $50 to $100 an ounce sort of range based on current external variables.

44:16 I'll take that one. It's Andrea. So we typically provide costs just kind of one year out. It's pretty difficult to make the call in particular on inflation longer than that. I think maybe important to note and many more. on our costs.

45:05 With the one caveat that we're continuing to watch where diesel prices go, oil prices as well as the crack spread. So we don't think that that currently has a big impact on this year, but we're continuing to look at it as we go through the budget process.

45:22 Yeah, and I would just pile on there just to completely support everything Andrew just said. One of the things we're working on or executing is what we call our grade enhancement strategy. So as we look through 27 into 28, 29, that's when the grade enhancement strategy starts to kick in. So we expect we'll start to get the The benefit of the underground grades at Phase X, the benefit of Curlew, we've got higher grades underground. And of course, our mine plant has us approaching the bottom of the pit at Tassius where we get back into the high grades.

46:11 So to Andrea's point, operationally 27 is a lot like 26. We'll keep going with efficiencies and everything we can do to Manifest that inflation, but looking through the windshield, we should have an organic offset.

46:29 Maybe I'll just add to back to 2027. We do also have hedges in place against the oil cost component of the diesel price in 2027. We're about 50% hedged for 2027. Okay, so you're 50% hedged.

46:49 And at what sort of level relative to this year's trending diesel cost?

46:57 In the low $60 a barrel. Okay. $65 a barrel.

47:03 Okay. That's very helpful. Thank you. Second one, maybe just touching on Matt's questions on CapEx. You got a $260 million, I think, in great there this year. What should we be expecting for a run of CapEx into next year, assuming the FID comes through in line with your expected timelines? And a similar question in Lobemarte, is that going to be incurring kind of pre-approval spend in 27?

47:33 Yeah, if you look back at what we just exposed to the PA time, it's got a bit of a got it okay so the 500 million is from a timeline standpoint still valid and then we should just apply an inflation factor onto that is that the right way of thinking about it yeah that's what we're thinking right now and then Lobo Marte, you know, isn't in full construction next year.

48:31 That's more still early spend. So we're still doing our budgeting work, but that's not in the same scale next year. We really will get into full construction later at 28 into 29. So it's a little bit staggered behind right there.

48:46 Okay. Thanks. And then the final one. Yeah, the lift in free cash flow payout in terms of cash returns I think is supportive, but you're still accruing 50% of the free cash flow on the balance sheet if you stick to that policy. We've seen some decline in asset values in the sector more broadly. What are you seeing on the M&A landscape? Is there any irons in the fire that look more attractive? as equity values in the sector are coming down?

49:28 Look, again, our standard sort of response on that is we're keeping an awareness of what's out there. We feel we're in a pretty good position with our organic internal optionality. We've got over 40 million ounces of resource. And you recall last year, One of the things we did is we brought a number of our U.S. brownfield projects out of that resource category through further drilling, further study, and we basically moved things out of resource into reserve. So we've got lots of depth in the portfolio to keep advancing internally. But yes, we do keep an awareness and an eye on what's out there.

50:17 again we've got a fabulous balance sheet we've got very strong cash flow we've got a great internal resource optionality so we don't feel under pressure so we do look particularly if there's a process or something's going on we'll take a look at it but if you look in the rear view mirror we've been pretty disciplined in terms of when we Great. Thanks so much. Your next question is from Kerry McCurry with Kennecourt Genuity.

51:17 Hi, good morning. Just a question on La Coypa. Just wondering in terms of the mine plan, like how long do you expect to be mining in this area with high copper grades and just maybe more broadly, you know, how much of the mine plan contains that sort of ore?

51:34 Yeah, these really high copper sulfides are... at the bottom of phase seven, which we're planning to finish next year, our current permitted fits there. We do have a resource out there in the future. And given the grades that we're seeing, as we mentioned in September, we are looking at optionality really for the 30s. So this is stuff that would come in for a little market day on the back of quotation circuit or something like that for those resources and high copper grade sulfides that are below the best. but the current plan is just through 27. That's why it's had a limited impact on us.

52:15 Okay, and I guess that's why your 2028 guidance is still 2 million ounces? Or less? Sorry, we didn't hear you fully. That's why what? Yeah, your 2028 guidance still shows 2 million ounces. I guess you're expecting not much of an impact then in 2028 from either Ram Mountain or Fleck Wifer?

52:35 Yeah, there's no... impact from phase seven or sulfides in 2028 because we're planning to do that next year anyways.

52:45 Okay and then just switching the grape there just wondering you know you've got the decline progressing just wondering when you expect to be drilling from underground there?

52:57 Yeah we think that'll be early next year if everything stays on target and the top end of the ore bodies drill off in a couple of areas. We're on track for doing that early next year.

53:12 Okay, great. That's it for me. Thanks. Your next question is from Tanya Deconnewick with Scotiabank.

53:27 Good morning. I think that's me. Thank you for taking my question. I wanted to circle back on costs, if I could. Just looking at your input costs as you think about your 2027 guidance, can you comment on, and I think, Paul, you mentioned a tight labor market. Can you comment on what you're seeing in terms of your labor inflation and turnover? I think it was at about 10% for the company. I'm just trying to understand what that component is looking like and what your consumable costs I can start, Tanya.

54:10 I think on labor specifically, again, all of this is with the caveat that we're just in the budget process right now. The average labor inflation, we're thinking around 5-6%, but it's not equal everywhere. So, as always, it's you know typically higher in the U.S. and in Nevada but we're roughly seeing about on average in that kind of five to six percent range and as I said overall inflation around five percent.

54:42 And generally just to add on you know as we've said many times annually Nevada tends to be our hottest markets there's competition for Thank you for joining us. that we're dealing with around the world.

55:28 And we have signed labor agreements for our assets outside of the US.

55:38 Go ahead.

55:41 Yeah, I was going to say, again, we break it down into our component parts. I mean, again, you can sort of pick your rule of thumb. But when you think about energy, labor, and consumables, We've touched on energy, our hedge strategy, what we've been doing there. That's been quite successful. That continues. Again, consumables, again, there's a bit of ebb and flow, but nothing right now that we're seeing that's too dramatic. That's concerning us.

56:15 Okay. So I can play around with the oil price assumption, but from a consumable side, there's nothing for us to focus on. Maybe just on the capital side, then you mentioned again for Great Bear that we'll have an update on capital with inflation plus this tightness in the labor market. So should I be thinking high level what we've seen historically for CapEx increases, which have been up to like 20, 30 percent from previous numbers? Would that be something I'd be off? from your $1.4 billion that you put out in 2024?

57:00 Yeah. I'll start and then we'll compile it. I mean, obviously, the biggest component of all of this would just be the true up with inflation. And you can kind of do the math from starting back in 2023. You know, as you go beyond inflation, the next category would be, I would say, discretionary changes of scope or approach. Discretionary generally means we're doing it for good reason. We see a value creation opportunity, we see an efficiency, we see a longer term benefit.

57:47 So inflation, discretionary. And then I guess the last bucket I would say is more at the market today. And definitely, you know, it is a hotter market in terms of attracting labor right now. We're anticipating that. And some of it goes back and forth. For example, you know, one of the things we're thinking about as we look forward to Red Lake is our housing strategy. You know, and attracting the best people to a new project part of the equation will be what's our plan, what's our housing strategy, what will we offer in terms of, and those can impact your scope change.

58:34 In the case of Red Lake, we're looking at a balance of residential community within Red Lake as well as maintaining a camp to attract people that still would prefer that rotation. So there's all kinds of things that go in there in terms of Thank you very much. The payback on this project has always been pretty incredible in terms of months, really.

59:31 So even with some additional capital, we're going to be, this is what I would call a particularly capital-sensitive project given production margins and cash flow.

59:45 Yeah, we really are, given the long-term projects, to make sure we have the talent to achieve that. You've seen the numbers, but it's 500,000 ounce a year producers. So the cashflow on that with PASEC is significant and gives us a really strong payback. We don't have a definitive number yet because we are only 55% of the way through our detailed engineering. We're just only now starting the procurement process for our major contractors. So we'll be able to answer the questions specifically much better and H1 of next year. But again, we're just focused on getting the detailed engineering done and making sure we're building a resilient asset given the multi-decade potential we see there.

1:00:33 Yeah, no, it was just more like trying to get a sense, like I'm not going to wake up to a doubling of capital versus, you know, something that has been more in the industry in that 20, 30%.

1:00:44 Yeah, I mean, when we did the P&A, we were at 1.4 plus 400 on the we really need to get to next year to give you a better sense of it.

1:01:01 Okay and then my final question is how are you thinking about your reserve and resource pricing and your cutoff grade as we get closer to year end and you put and you're looking at your mine plan for life of mine plans in 2027? Yeah sure maybe

1:01:24 Yeah, we're, you know, we're doing the process right now. So we haven't finalized yet. But we do, for us, we tend to look a lot at three year trailing. We think that's a pretty relevant piece of information that we'd like to track and follow. So obviously, that's up. So we're now considering kind of a relative ratio, increasing our reserve and resource price. We haven't picked the final number yet, but we do. and the Gold prices that we've seen.

1:01:57 Yeah, and again, just for context, the three-year average is still significantly below spot. I think you've seen the pattern as being sort of a drag up over time with some significant discount to where we are at spot. I wouldn't expect any Any sort of material changes from there. The bigger point, though, which is really important that we want to stress is around cutoff grades. And as we've said many times, we have no intention to drop our cutoff grades. We are looking at cutoff grades. in long-term stockpiles for something that we might put in at the end of the mine life, mill life, that sort of thing. But generally speaking, our mills are full. We've got all the grain we need, and we have no requirement or no need, if you will, to drop our cutoff grades to keep our mills full.

1:03:06 You'll see a kind of a lagging revenue line adjustment with reserve resource pricing, which is, I would say, in line with the trend in the last few years, as well as to think along the lines of a three-year rolling average. Don't expect us to be doing anything dramatic with cut-off breaks.

1:03:31 Okay. It's just the three-year rolling average is over 3,000, so that would be a big move from 2003.

1:03:37 If we don't go right at the three-year trailing, the point is to stay consistent. We were at a historic discount to the three-year trailing last year with our reserve price. We will probably still be at a historic discount to the three-year trailing this year. But the point is to try and incrementally move up in a ratio that's similar to what the Gold

1:04:06 Thank you for taking my questions. Your next question is from Lawson Winder with Bank of America.

1:04:16 Thank you very much, operator, and good morning, Paul and team. I appreciate you fitting me in. I recognize we're running a little bit over time here, so I'll just keep it to two maybe questions.