Kinross(KGC) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q3, the company produced 504,000 ounces of gold at a cost of sales of $1,145 per ounce, resulting in record free cash flow of nearly $700 million for the quarter and over $1.7 billion year to date [4][10] - Adjusted earnings were $0.44 per share, with adjusted operating cash flow of $845 million [9] - The company ended the quarter with approximately $1.7 billion in cash and $3.4 billion in total liquidity, increasing by over $600 million from the prior quarter [10][12] Business Line Data and Key Metrics Changes - Paracatu produced 150,000 ounces at a cost of sales of $933 per ounce, remaining on track to meet its guidance [15][16] - Tasiast delivered budgeted production of 121,000 ounces at a cost of sales of $889 per ounce, supported by strong mill performance [16] - US operations collectively produced 175,000 ounces at a cost of sales of $1,469 per ounce, with Fort Knox and Bald Mountain contributing significantly [18][19] Market Data and Key Metrics Changes - The average realized gold price was $3,458 per ounce, leading to margins of over $2,300 per ounce [9] - All-in sustaining costs increased due to higher gold prices impacting royalties and sustaining capital expenditures [9][13] Company Strategy and Development Direction - The company is committed to strengthening its balance sheet through debt repayment and enhancing shareholder returns, planning to increase capital returns beyond the minimum $650 million for the year [5][12] - The operational focus includes cost management, productivity improvements, and leveraging a strong resource base for future growth [15][20] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full-year production targets, with operations on track for the fourth quarter [8][12] - The company anticipates higher tax payments in 2026 due to increased gold prices, impacting cash flow [13][48] Other Important Information - The company received a positive credit outlook from S&P during the quarter, reflecting its strong financial position [10] - Significant progress was made in sustainability initiatives, including local educational infrastructure development [7][8] Q&A Session Summary Question: Cost reduction efforts compared to peers - Management highlighted various global initiatives focusing on contractor relationships, labor productivity, and maintenance efficiencies [34][36] Question: Incremental tons from Redbird pit - The Redbird pit will provide incremental tons and ounces, expanding the heap leach facility [37][39] Question: Capital returns and balance sheet position - Management indicated a desire to maintain a strong balance sheet while returning capital to shareholders, with updates expected in the new year [43][46] Question: Tax payable accrual for Q1 - Significant tax payments are expected in Q1 2026, with approximately $400 million accrued [48][49] Question: Permitting timeline at Great Bear - The AEX permits are not on the critical path for the main project timeline, with no expected delays for the main project [50][51] Question: Capital allocation strategy for next year - Management emphasized a flexible approach to capital allocation, balancing returns to shareholders with reinvestment opportunities [78][81]