Kinross(KGC) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a strong second quarter, producing 513,000 ounces of gold at a cost of sales of $10.74 per ounce, resulting in record operating margins and free cash flow of almost $650 million for the quarter [3][4][12] - Adjusted earnings were $0.44 per share, with adjusted operating cash flow of $844 million, and attributable free cash flow reached a record $647 million [13][14] - The company ended the quarter with over $1.1 billion in cash and approximately $2.8 billion in total liquidity, improving its net debt position to around $100 million [14] Business Line Data and Key Metrics Changes - Paracatu produced 149,000 ounces at a cost of sales of $958 per ounce, while Tasiast delivered 119,000 ounces at a cost of sales of $843 per ounce, both meeting production guidance [18][19] - La Coipa produced 54,000 ounces at a cost of sales of $13.97 per ounce, with production expected to improve in the second half of the year [19] - U.S. operations collectively delivered 190,000 ounces at a cost of sales of $12.29 per ounce, with Fort Knox and Bald Mountain contributing significantly [20][21] Market Data and Key Metrics Changes - The average realized gold price was $3,285 per ounce, leading to record margins of just over $2,200 per ounce [12] - The company expects to produce 2 million ounces for the full year at a cost of sales of $11.20 per ounce, with all-in sustaining costs projected at $1,500 per ounce [15] Company Strategy and Development Direction - The company is focused on maintaining financial discipline and prioritizing margins to drive strong cash flow, supporting ongoing capital returns to shareholders [10][11] - There is a commitment to sustainability, with progress in water management initiatives and a comprehensive annual sustainability report published [9][10] - The company sees value-generating investment opportunities across its portfolio, aiming to extend mine life while focusing on margins and shareholder value [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance following a strong first half, with expectations of continued strong cash flow and a robust balance sheet [10][34] - The company is focused on maintaining a strong production profile and generating significant free cash flow, with plans for ongoing share repurchases and dividends [4][34] Other Important Information - The company is advancing several projects, including brownfields and greenfields, with positive exploration updates expected to contribute to production profiles in the coming years [7][23] - The company is also progressing with permitting processes for key projects, including Lobo Marte, which is expected to be a high-margin contributor [66] Q&A Session Summary Question: Outlook for Bald Mountain in the second half - Management indicated that production at Bald Mountain will be slightly lower in the second half due to the completion of high-grade areas [38] Question: U.S. Operations performance - Management expects continued good performance from U.S. operations, although slightly lower production is anticipated in the second half [41] Question: Details on the Pier N layback - The company has over 5 million ounces of resource at Pier N, with an average grade around 2 grams per tonne [45] Question: Plans for debt repayment - The company plans to repay the $500 million notes due in 2027 and is comfortable holding the debt given its attractive rates [48] Question: Free cash flow and share buybacks - Management confirmed a commitment to share buybacks, with excess cash potentially allocated to this depending on gold prices [51] Question: Life of mine plans and reserve/resource base - The company is focused on margin and cash flow, with significant optionality in its portfolio and good exploration results [56][58] Question: Properties with strong exploration results - Key areas of excitement include Kerloo and Phase X, which are expected to contribute to production in the late 2020s [62]