Kinross Gold - Earnings Call - Q4 2024
February 13, 2025
Transcript
Operator (participant)
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. 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 the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star again. Thank you. I would now like to turn the conference over to David Shaver, Senior Vice President of Kinross Gold. Please go ahead.
David Shaver (SVP of Investor Relations)
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 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 three of this presentation, our news release dated February 12th, 2025, the MD&A for the period ended December 31st, 2024, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.
Paul Rollinson (CEO)
Thanks, David, and thank you all for joining us. This morning, I will provide an overview of our fourth quarter and full-year results, highlight our operations, projects, and provide an outlook for the business going forward, and make 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 oz. With respect to the full year, once again, we achieved our market commitments, delivering over 2.1 million oz. We also delivered on our full-year cost of sales and all-in sustaining cost guidance, which demonstrates our strong focus on rigorous cost discipline. As a result, we generated record free cash flow of more than $1.3 billion, which more than doubled against the prior year.
This record cash flow generation also benefited from strong operating margin action, 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 two largest assets, Tasiast and Paracatu, were both standouts, together accounting for approximately 1.2 million oz, 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 delivered a full-year production exceeding the midpoint of guidance and exceeding 500,000 oz for the 7th consecutive year. At La Coipa, we delivered on full-year production guidance as work continues on long-term optimization of the mill. At 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, with estimated average annual production of approximately 500,000 oz at an impressive all-in sustaining cost of approximately $800 per oz. For the Great Bear Advanced Exploration Program, we have received all the necessary permits for our current activities, and we expect to receive the two remaining permits when they are required later in the year. The yearly works activities, including tree clearing and earthworks, commence 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 m developed to date and 21 km of drilling completed last year. As outlined in our news release, we are continuing to see strong exploration results from Phase X, reaffirming our vision for a high productivity, low-cost underground mining operation. At Bald Mountain, we have unlocked additional value from the approximate 4 million oz resource base with the conversion of nearly 1 million oz into reserves. This conversion marks an important first step in extending the mine life at Bald, where we now see a strong case to proceed with initial mining at the Redbird pit.
We are proceeding with a disciplined approach, expecting that Redbird 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 prevailing 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 oz gold price and our resources on a $2,000 per oz 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 multi-year production profile.
Production of 2 million oz 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 oz remains consistent with previous guidance, and we are introducing a new year of production of 2 million oz for 2027. Beyond 2027, we expect production to remain around 2 million oz through the end of the decade. Maintaining production at this level will be based on future production from our pipeline of project opportunities, which include Redbird extensions at Bald Mountain, open-pit extensions at La Coipa, Phase X underground at Round Mountain, Curlew in Washington State, and Great Bear to round out the decade.
We will continue to advance these initiatives, and 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 sustainability by operating responsibly and advancing our strategy across this important area.
In May, we will publish our 2024 sustainability report, which will provide a detailed review on our sustainability performance and initiatives throughout the year. Some highlights from 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 flood 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 and Mail 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 her 20-year directorship with Kinross. Catherine has been an independent board member since 2005 and chair of the board since 2019.
Catherine will be retiring from her role at our AGM in May, and we are pleased to announce Kelly Osborne will take on Catherine's previous role of independent chair. With that, I will now turn the call over to Andrea.
Andrea Freeborough (CFO)
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 and outlook. As Paul noted, we delivered production in line with guidance in 2024. Full-year attributable production was 2.13 million oz, with production of 501,000 oz in the fourth quarter. Q4 sales of 518,000 oz were slightly above production due to timing. Cost of sales of $1,096 per oz and all-in sustaining cost of $1,510 per oz 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 oz and full-year all-in sustaining cost of $1,388 per oz were also in line with guidance.
Margins were strong at $1,567 per oz sold in Q4 and $1,372 per oz 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 $614 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 the 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 third 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 is generating 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 for 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 semi-annual interest payments. As such, we'll provide an update on our return of capital plans with our Q1 results in May. Turning to our guidance and outlook. As Paul noted, we're forecasting production in the range of 2 million oz for 2025, remaining consistent with previous guidance. For costs, we're guiding $1,120 per oz for cost of sales and $1,500 per oz for AISC. Cost of sales and AISC are both up approximately 10% compared with 2024. The expected increase is driven by three factors, which mainly include structural changes to our portfolio this year.
First, production guidance of 2 million oz relative to 2.1 million oz last year, resulting in a denominator impact on our fixed costs and on sustaining capital in the case of all-in sustaining costs. Second, with a lower planned contribution from Tasiast this year, we will see a smaller benefit from our lowest-cost mine. Last, modest overall cost inflation of 3%-4%. Our capital expenditure guidance of $1.15 billion for 2025 reflects annual inflation and planned higher capital spend as we continue to advance Great Bear. Approximately $615 million of our total CapEx is expected to be non-sustaining. Looking ahead to 2026, our production guidance of 2 million oz remains unchanged from our guidance update last year. Beyond 2026, we have introduced another year of production guidance of 2 million oz for 2027 in line with 2025 and 2026.
Subject 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 Schimper (COO)
Thank you, Andrea. In the fourth quarter, we officially launched our health and safety brand called Safeground and commenced work on establishing Safeground leadership development program that will be tailored and delivered to four 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 our culture of operational excellence continue to drive strong results from our operations. Production of 501,000 oz in the fourth quarter was planned. Starting with Tasiast, the mine delivered record throughput, production, and cash flow. Record full-year production of 622,000 oz at an impressive cost of sales of $681 per oz drove record free cash flow from our lowest-cost operation. In the fourth quarter, Tasiast delivered production of 139,000 oz at a cost of sales of $725 an oz.
Production was lower over the prior quarter due to a planned reduction in grade. Production at Tasiast is expected to be lower in 2025 as mining continues transitioning into lower grades. Tasiast is expected to deliver 500,000 oz with a target cost of sales of $860 per oz and is expected to be our lowest-cost operation once again this year. Paracatu delivered another strong year with production of 529,000 oz, exceeding the midpoint of guidance, and a cost of sales of $1,039 per oz, 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 oz was lower over the prior quarter, as stronger grades were offset by lower throughput resulting from the timing of some more maintenance and mine sequencing.
Production at Paracatu is expected to be higher and cost lower this year as mining continues within the higher-grade portion of the pit. Paracatu is expected to produce 585,000 oz at a cost of sales of $1,025 per oz in 2025. At La Coipa, fourth-quarter production of approximately 59,000 oz improved over the prior quarter on stronger mill throughput, which offset lower grades. Full-year production of 246,000 oz was in line with guidance. The site team continues to manage throughput while long-term mill optimization initiatives are being implemented. At La Coipa, it is anticipated to produce 230,000 oz at a cost of sales of $1,060 per oz 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. sites delivered full-year production of 731,000 oz at a cost of sales of $1,313 per oz, which was in line with guidance. Production of 179,000 oz in the final quarter was on plan. In Alaska, fourth-quarter production of 92,000 oz was lower compared to the prior quarter, and cost of sales of $1,320 per oz was higher due to the timing of the processing of the Manh Choh ore. At Bald Mountain, we produced 45,000 oz at a cost of sales of $1,144 per oz, and production was in line over the prior quarter, while cost was slightly lower due to the timing of sales. At Round Mountain, production of 43,000 oz was in line compared to the prior quarter. Cost of sales of $1,764 per oz was higher due to the accounting of higher-cost oz from the leach pads.
Mining at the Phase S open pit 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.
Will Dunford (SVP of Technical Services)
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 1.7 million oz increase. We did also see some additions in the M&I category, which were largely offset by conversion of 1 million oz out of M&I into reserve at Bald Mountain. We have updated our reserve and resource gold price assumptions from $1,400-$1,600 and from $1,700-$2,000, respectively.
The intention of this was to be more reflective of the current gold price environment. With the increase in our gold price, we are taking a 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 oz in M&I and another 13 million oz 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 '30s. 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 2030s 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 oz of resource to reserve in the Redbird pit. We have split Redbird into two phases. We have approved and already started mining phase I, which contains 270,000 oz and will take production into 2028, phase II, containing approximately 690,000 oz 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 I into 2027 while we continue to optimize our design and execution plan for phase II. The initial CapEx of $120 million for phase I is primarily pre-stripping costs, as phase I leverages the existing leach pad capacity, thereby minimizing our initial capital risk.
The project has an all-in sustaining cost of $1,500 per oz and a strong return at today's gold price. We also continue to focus on additional optionality at Bald Mountain outside of Redbird, including looking at small satellite pit opportunities that could be combined with Redbird too. At Tasiast, we have completed a new mine plan on the back of the 2024 reserve update. Tasiast production over the next three years is expected to be lower, driven by mine plan sequencing and lower milled grades as we focus on stripping in West Branch 5. It has been a focus for the Tasiast team to increase production in the 2025 through 2027 window through operational improvements, design optimizations, and unlocking satellite opportunities. This work has added approximately 100,000 oz over this three-year period as compared to the mine plan update we provided in 2023.
Optimization at Tasiast is ongoing, with additional satellite opportunities being evaluated. Studies to explore underground potential are also progressing, with recent drilling at West Branch intersecting wide mineralization 700 m down plunge 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 the addition of 125,000 oz at 9 g per ton in the Stealth Zone, which continues to be open both along strike and dip. Not only are we seeing strong grades in the zone, but it's also coming in at a very minable width, averaging just over 5 m.
This focus on high-grade extensions itself will continue in 2025 with an expanded drill program to 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 three to 4 g per ton, 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 2025 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, and earthworks for excavation for the exploration infrastructure has commenced.
We are excited to have broken ground and are focused on progressing 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 km 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 Great Bear back in September, highlighting the successful addition of over 500,000 oz of high-grade inferred resource at depth 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 have shifted our focus at Great Bear to regional exploration work on the 120 sq km 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 two main areas: growth around the Fort Knox pit and around the Gil satellite pit. 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 Tasiast, we added 110,000 oz to reserves in 2024 through the addition of the Fennec satellite pit.
Exploration in 2025 will focus on further expanding mineralization at the underground target and drilling out additional satellite pit opportunities on the wider land package. Moving to Chile, our brownfields program further delineated porphyry mineralization, and in 2025, we will follow up on these results and also progress exploration of known trends on the La Coipa license. In Brazil, our brownfields program focused on testing targets along the northwest corridor from Paracatu, with results showing similar style and grade of mineralization to the Paracatu deposit. Moving to our greenfields program, approximately 45 km of drilling was completed on targets located in Canada, the U.S., and Finland. In Manitoba, our drilling at Laguna continued to define high-grade shear-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 Carlin and Low Sulfidation gold mineralization. This drilling included an initial diamond drill hole at the PCJB project in September, which successfully intersected lower plate carbonates associated with the Cortez District at depth. In Finland, we progressed both base-of-till drilling for target delineation and follow-up diamond drilling, which showed some high-grade intercepts at Lawn East. In Finland, we will follow up on these successes in 2025 and continue our exploration of this underexplored greenstone belt. Overall, we are encouraged 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.
Paul Rollinson (CEO)
Thanks, Will. After delivering on our commitments in 2024, we are well positioned for a successful 2025. Our business is in great shape, both operationally and financially, with a number of key milestones for the year ahead, including repayment of our term loan, pre-stripping at Redbird, advancing permitting across Great Bear, Curlew, La Coipa, and Lobo-Marte, advancing exploration decline infrastructure at Great Bear, reinstating our share buyback plan, initial production from Phase S, satellite mining at Fennec, 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 are very proud of our commitment to responsible mining that continues to make us a leader in sustainability. With that, operator, I'd like to open up the line for questions.
Operator (participant)
All right. Thank you. And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press star one again. Once again, please press star one to ask a question. Your first question comes from the line of Mike Parkin with National Bank. Please go ahead.
Mike Parkin (Head of Mining Research)
Hi, guys. Thanks for taking my question. 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's Tasiast operation in the fourth quarter. How many days was that shutdown?
Claude Schimper (COO)
Hi, good morning, Mike. It's Claude. Yeah, we did a shutdown for about four to five days. We did some relining stuff and changing some belts 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.
Mike Parkin (Head of Mining Research)
Well, yeah, that's what I was kind of getting at, because when I adjust for that, on 87 operating days, you're over 25,000 tons per day. So that's like the second consecutive quarter year. 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 in terms of throughput guidance?
Claude Schimper (COO)
Yeah, Mike, all of that is as planned. In order to do an average of 24,000 a day, you need to do some days 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 I said, we moved to lower grade, so production was 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 when we could.
Mike Parkin (Head of Mining Research)
Okay. And in terms of the limiting factor there, are you more mill constrained or pit constrained in terms of getting or either out of the pit or through the mill?
Claude Schimper (COO)
I think the ultimate constraint is the plant because we've got some stockpiles. As we manage through from phase IV at the bottom of the pit now going into the phase V stripping, we will balance production through stockpiles and mine performance. Ultimately, we've designed this plant to run an average of 24,000. There will be times that we average slightly above that and other times slightly below, but we're just come along strong after some tough years, and we're pushing the boundaries and the limits, and we constantly learn more about the plant and how certain things behave. It will be a balance of making sure we maintain our recovery levels. Don't push the tons too hard to then start losing on recovery.
Mike Parkin (Head of Mining Research)
Okay. And then switching over to the exploration side of things in the reserve and 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 grade set at? And, just kind of trying to understand what you're reporting versus what you're kind of realizing that the drill did.
Claude Schimper (COO)
Yeah, we don't have an underground reserve or resource at Phase X at Round Mountain yet. The resources on the books and reserves are all open pit. We're hoping after this infill drilling that we're doing now, that's the reason we're doing it, is to get an initial underground resource out at the end of year this year with our annual update.
Mike Parkin (Head of Mining Research)
And I think.
Claude Schimper (COO)
I think geologically it's going to high grades.
Mike Parkin (Head of Mining Research)
Okay. Yeah, because I think I remember you guys guided the market to kind of three to 4 g historically in terms of where the underground could kind of shape up. Is the feeling that's maybe a bit conservative given the consistent, really good drill results you're putting out in the market from that?
Claude Schimper (COO)
Oh.
We don't want to get ahead of ourselves, and that is why we're doing the infill drilling. You can see on slide 25 and what we released that we've got a pretty extensive table on the right-hand side that shows all of the drilling in that upper right portion of the exploration target. You can see there both the wider intervals and the narrower intervals with the higher grade highlights. We want to get the bigger resource, and we want to get the bulkier deposit so you can see a more representative idea of the grade in those wider intervals. We do still see it being in that three to four gram per ton range. That's ultimately how we're going to maximize the economics on this is by going to bulk mining with these pretty exceptional wide zones.
Mike Parkin (Head of Mining Research)
Okay. Looking forward to the update. Congrats.
Operator (participant)
And your next question comes from the line of Anita Soni with CIBC. Please go ahead.
Anita Soni (Managing Director)
Hi, good morning, Paul and team, and congratulations to the whole team on a very successful year on many fronts, and I agree with Mike on that slide 20 and 21. It's good to see those slides again, especially from companies with a track record of actually executing on what they say they will do. A question on the Redbird addition. On the phase II, could you give us an idea of what additional incremental capital would be needed to get that additional 700,000 oz in?
Will Dunford (SVP of Technical Services)
Yeah, look, we're still working on phase II. That's why we've approved phase I. The main benefit of, well, one of the many benefits of phasing this is that the phase I cash flow that comes from those early oz is intended to pay the majority of the CapEx for phase II to keep that site relatively cash flow neutral as it strips phase II. So we don't have an exact sense of the CapEx yet, and we need to complete our work. But that's the idea is to try and keep our current gold prices above zero as we strip phase II.
Anita Soni (Managing Director)
Okay. And then just a question for 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 outflows that you're expecting in Q1, and then if gold prices stay where they are, you can start executing on that in Q2, or is it more a back half of the year?
Paul Rollinson (CEO)
No, I think that's exactly as you described it, Anita. Again, from my perspective, 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 2024. But as Andrea said, all 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. So 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 (Managing Director)
Okay. Another question just on a big picture, I guess, Great Bear, and I'm just wondering if you've seen any on the permitting front, have you seen any change in, I guess, the government standpoint in terms of how motivated they are to get these permits to you?
Paul Rollinson (CEO)
Yeah. 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 Geoff to kind of expand on it. He's on the front line of that one.
Geoffrey Gold (President)
Thanks, Paul. Yeah. No, Paul's right as a practical matter. There is a little bit of a slowdown, but we've spent a lot of time both provincially and federally connecting 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 delay.
Anita Soni (Managing Director)
Okay. Then lastly, 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 things weighing more. Well, I could be wrong about that, but I just wanted to get an idea of what the standard kind of tonnage that we would expect out of Manh Choh would be. Those are pretty good grades this past quarter as well. I just wanted to comment on that.
Claude Schimper (COO)
Yeah, Anita, you're correct. As we go through seasonal things in the north, we end up with different load restrictions. We also have one load restriction that came after the feasibility study that we've had to adjust for, and given we balanced the number of trips on a daily basis. But we expect to do an average of 200,000-220,000 batches when we do Manh Choh because, as you can appreciate, we switch from very low-grade Fort Knox to higher-grade Manh Choh and then back to Fort Knox. So our average is about 220,000 per batch, and we expect to maintain sort of one-quarter-ton cadence.
Anita Soni (Managing Director)
Sorry. So 220,000 K tons per quarter, and you batch out the shipment? Okay.
Claude Schimper (COO)
Yes.
Anita Soni (Managing Director)
All right. Okay. Thank you very much. That's it for my questions.
Operator (participant)
Your next question comes from the line of Josh Wolfson with RBC Capital Markets. Please go ahead.
Josh Wolfson (Head of Global Mining Research)
Yeah. Thanks very much. 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. I'm just wondering how the team is going to be evaluating the buyback in the context of how the share price has performed. It's been a phenomenal year to date, phenomenal year of a year. Is that going to influence the quantum of the buyback, or is it going to be a more mechanical or formulaic process? Thanks.
Paul Rollinson (CEO)
Yeah, 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'll think about that in the context of spot. So you can look at our valuation of share price in the sense of consensus. With a consensus gold price, you can also look at it in the context of spot. 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 time 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.
Josh Wolfson (Head of Global Mining Research)
Got it. Thanks. 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 La Coipa, but 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. Thanks.
Andrea Freeborough (CFO)
Yeah, it is both, Josh. So starting with Mauritania, 2024 was the first year that we became income taxable in Mauritania. So if we look at the cash tax guidance, about $200 million of it is payments that we'll actually make in Q1 that are related to 2024. So yeah, 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.
Josh Wolfson (Head of Global Mining Research)
Got it. Thanks. And sorry, just to clarify for Tasiast, should we be assuming the full corporate tax rate or 25%, or is it still a low tax year versus steady state?
Andrea Freeborough (CFO)
No, it's still normal tax year.
Josh Wolfson (Head of Global Mining Research)
Got it. Great. Thank you.
Operator (participant)
Your next question comes from the line.
Paul Rollinson (CEO)
What were you going to say, Andrea?
Operator (participant)
Sorry, go ahead.
Paul Rollinson (CEO)
You can advance to the next question, please.
Operator (participant)
Thank you. Your next question comes from the line of Carey MacRury with Canaccord Genuity. Please go ahead.
Carey MacRury (Equity Research Analyst)
Hi, good morning, everyone. 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 building up a cash balance ahead of Great Bear? Is there a minimum cash balance that you want to maintain? And then I guess the second question is the term loan's gone. There's no debt due till 2027. Just broadly speaking, in terms of debt, are you comfortable 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 (CFO)
Sure. Thanks, Carey. I'll start with the debt part. You're sort of hitting it right on. We look forward to the 2027 notes as the next maturity, and we do plan. We would like to repay those notes. So that's kind of back of our minds 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, 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 we've got some interest payments in Q1. We'd like to get back to where we started the year, and then we'll look to allocating some of the excess cash out in the form of buybacks.
Carey MacRury (Equity Research Analyst)
Okay. Great. And then maybe just a mechanical question, but just in terms of the quarterly sequence of production, you did 500,000 oz in the quarter, 2 million oz is the guidance. Should we be expecting relatively consistent production through the year, or is there sort of seasonality that we should consider?
Andrea Freeborough (CFO)
It's relatively even consistent as we look out to this year.
Carey MacRury (Equity Research Analyst)
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.
Will Dunford (SVP of Technical Services)
Yeah. We've got our current what you see on the reserves takes us through 2027 in terms of the mine life. And then the permitting that was discussed there in the press release is really just for further extensions of the open pits there. We've got additional oxide pits, 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 (Equity Research Analyst)
So potentially take it out to like 2030 or so?
Will Dunford (SVP of Technical Services)
Yeah. Yeah. It all depends on, I guess, gold price, but those should be able to take us at least through 2030. We do have a meaningful inventory potential there. You can see it on our resource statement. So potentially it could go beyond that, but.
Carey MacRury (Equity Research Analyst)
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?
Will Dunford (SVP of Technical Services)
Yeah. We'll most likely update that report with our AISC this year.
Carey MacRury (Equity Research Analyst)
All right. Great. That's it for me. Thanks, everyone.
Operator (participant)
Thank you. And your next question comes from the line of Lawson Winder with Bank of America. Please go ahead.
Lawson Winder (Equity Research Analyst)
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 can expect to potentially see as soon as 2025?
Claude Schimper (COO)
Yeah. 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 at La Coipa, but there is a lot of good targets. It's pretty prolific ground out there. We've got a variety of historic pits in the area. So we had mentioned we will be doing some testing around some of those pits, looking for lower strip, higher margin kind of pushbacks in those pits. 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 into the higher grade to support pulling those ultimately into our production profile and reserves. But we will do some exploration at La Coipa as well.
Paul Rollinson (CEO)
I'll just jump in on that. I mean, part of the consideration in that part of Chile where we're operating Region III Atacama is water. We have existing permitted pumping water wells that support La Coipa, but we want to think about La Coipa's future and also Lobo-Marte, which we're advancing. We're trying to find the right balance between continuing to grow resources, looking to bring Lobo-Marte online towards the end of the decade, and working within our existing water permits.
Lawson Winder (Equity Research Analyst)
That's perfect. You addressed 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 mean, I think abundantly sustainable at the current level and potentially sustainable at a higher level. Is that something you're also considering? Thanks.
Paul Rollinson (CEO)
Yeah. Look, I think we just want to be careful. We want to be balanced. There was a question earlier. Does it make sense that the share price? We think it does, given our relative value. And so, 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 out 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 that environment as we look out to the second quarter as to what feels like the appropriate kind of proportion of free cash flow to allocate to the buyback.
Lawson Winder (Equity Research Analyst)
So if I'm hearing your answer, the preference is buyback over dividend. Is that fair?
Paul Rollinson (CEO)
That's correct.
Lawson Winder (Equity Research Analyst)
Great. Thank you very much.
Operator (participant)
And once again, if you would like to ask a question, please press star one. And your next question comes from the line of Tanya Jakusconek with Scotiabank. Please go ahead.
Tanya Jakusconek (Equity Research Analyst)
Yes. Good morning. I'm just with my questions and congrats on meeting your guidance for 2024. Just wanted to circle back to maybe close on the sequencing of your mine plans through 2025. Can you just remind me what major shutdowns, if any, are at any of your operations? I'm trying to offset the seasonality that you see 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 at any of your other operations.
Claude Schimper (COO)
Tanya, for the last couple of years, we've been working towards flattening those jagged saw-toothed-up performances through scheduling maintenance activities in a way that they're more a part of the process. We don't have major upgrades and shutdowns at any of the sites now. So it's typical mill maintenance. So some of them will have four-day shutdowns to do reliners. At Paracatu, it's a couple more days depending on which, whether it's the SAG mill or the ball mills. So we're managing that. And to Andrea's point earlier on, this is the year that we've actually got the tightest range between every single quarter. So we're going to manage that and manage the performance of each of those sites accordingly.
Tanya Jakusconek (Equity Research Analyst)
Okay. That's good to hear. And maybe Andrea, just you didn't answer the question on what minimum cash do you think you need to hold on the balance sheet to run this 2 million oz business?
Andrea Freeborough (CFO)
I mean, typically we've had, if we look back over the last number of years, our average cash balance has been about $500 million. So that's where we typically like to be. And some of that is just efficiently moving cash around the world.
Paul Rollinson (CEO)
As a minimum.
Andrea Freeborough (CFO)
As a minimum.
Paul Rollinson (CEO)
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 as to return and continuing to strengthen the balance sheet.
Tanya Jakusconek (Equity Research Analyst)
No, yeah, I appreciate that. Just wondered what you would feel comfortable on holding just for a 2 million oz business. If I could just continue maybe to actually Paul for you, just I'm looking and listening to, and thank you for that slide on page 20 about your 2 million oz production profile till the end of the decade. I think that would assume you have La Coipa and those additional pits, laybacks, or whatever that gets you to the end of 2030, the end of the decade. When do you have Curlew in? Is that a 2028? Could we fit in? And I remember one conference call would be about 100,000 oz. Is that still feasible?
Paul Rollinson (CEO)
Yeah. 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 oz towards the end of the decade, I basically say there's four things, two of which we just keep doing what we're doing. We keep mining at La Coipa. We keep mining at Bald Mountain. So that's the two that we keep doing. And there'll be two other things that are new that we haven't been doing. And that is Curlew and Phase X. And as you've seen with the results and 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?
Will Dunford (SVP of Technical Services)
Yeah. I think you can see we've been expanding the resource at Curlew in a very positive way, which was the goal a couple of years ago, and we've gone to that point where we're more comfortable on the economics and the margins and return. There is one main 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 convert to dry stack tailings. The rest of our permits are in place, so that is a bit of a milestone permit in terms of controlling the timeline. After that, we're already at the ore body underground. We're already in a pretty good position to get into development fairly quickly, so we haven't released specific guidance yet, but 2028 is a reasonable assumption on how we go through that permitting and construction path.
Tanya Jakusconek (Equity Research Analyst)
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, Paracatu, Great Bear all coming in towards the end of the decade and into the 2030s. How do you look at or evaluate external opportunities? Would you say you're more focused on production versus development?
Paul Rollinson (CEO)
What's next, Tanya? 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 a production. When I get the M&A question, which I get a lot, I mean, I think the history speaks a lot for what we have 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 three or four. We did the Bald Mountain back in 2015, bolt-on synergistic. We purchased some power plants in Brazil in 2018, Manh Choh and Peak Gold 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 we purchased that in 2022. And we're extremely pleased. 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 (Equity Research Analyst)
I appreciate that. I just wondered if you thought there's opportunities for you to add additional inventory beyond 2030, whether that makes sense for you?
Paul Rollinson (CEO)
No, it's a good question. Yeah. Look, and I think when I sometimes get the question, I'm not, say, worried about towards the end of the decade. When I'm thinking about the future of the company, we're thinking about mid-30s and beyond. And so that's kind of the timeline we're thinking about. So yeah, if there's good opportunities to add what we think is quality to the inventory, we'll look at it. But 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 newer 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.
Those better grades have driven our margins, which has been a natural offset to some of the cost pressures that maybe some others have faced.
Okay. If I could just squeeze one last question in for Geoff. Can you just give me an update on the two remaining permits that we require on the AEX program and negotiations with First Nations to First Nations, how that's going and what's the timeline of getting all of that?
Geoffrey Gold (President)
Sure, Tanya. So yeah, so we'll start with your AEX question, if that's okay. The two remaining permits that you're referring to, one is what we refer to as an industrial sewage treatment and construction permit, 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 in 2025 for that particular permit. We have to be clear. We have everything we need for our current AEX activities and have received four of those permits to date. On the First Nations 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 midst of negotiations with them on our project agreement or what's more commonly called an IBA. We've exchanged drafts. We've had economic discussions. That's going well. 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 (Equity Research Analyst)
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 approved and done?
Geoffrey Gold (President)
Yes. We're not sort of trailblazing here. You would expect to see the customary provisions that you would typically see in an IBA, and we're discussing those in our negotiations.
Tanya Jakusconek (Equity Research Analyst)
Okay. Great. Thank you and good luck.
Paul Rollinson (CEO)
Thank you.
Operator (participant)
Thank you. And there are no further questions at this time. I would like to turn it back to Paul Rollinson for closing remarks.
Paul Rollinson (CEO)
Great. Well, 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 (participant)
Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.