Kinross(US:KGC)2023-08-03 15:02Financial Data and Key Metrics Changes - The company produced 555,000 ounces of gold in Q2 2023, benefiting from seasonal factors and mine sequencing, with gold sales of 553,000 ounces [12] - The average realized gold price was $1,976 per ounce, with cost of sales at $900 per ounce, lower than the previous quarter due to higher production [12] - All-in sustaining costs (AISC) were $1,296 per ounce in Q2, a decrease from the prior quarter, primarily due to lower cost of sales [12] - The company ended the quarter with $478 million in cash and approximately $1.9 billion of liquidity, both improving from Q1 [13] Business Line Data and Key Metrics Changes - Tasiast produced 158,000 ounces at a cost of sales of $652 per ounce, with throughput ramp-up progressing well [16] - La Coipa was the lowest cost, highest margin mine, tracking well against full year production guidance [18] - Paracatu saw improvements in production and costs due to increased grades and recoveries, with Q3 expected to be the strongest for the year [18] Market Data and Key Metrics Changes - The company has produced over 1 million ounces year-to-date and remains on track to meet full year production and cost guidance [8] - The company repaid $220 million of debt in Q2 and plans to repay the remaining $100 million drawn on its revolver in the coming months [8] Company Strategy and Development Direction - The company is focusing on debt repayment and has paused share buybacks due to a change in credit outlook [8] - The construction of the Manh Choh project is on schedule and on budget, expected to contribute high-grade ore in the second half of next year [5] - The company is committed to advancing its ESG initiatives, including a solar project at Tasiast expected to deliver 34 megawatts of renewable energy [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full year guidance and highlighted strong cash flow generation [8] - The company anticipates cost increases in the second half of the year due to inventory accounting impacts but expects costs to decline in 2024 [15][52] - Management remains optimistic about exploration potential at Great Bear and other projects, expecting resource increases by year-end [26][68] Other Important Information - The company has repurchased $400 million of shares since the beginning of 2023, representing 8% of shares outstanding [8] - The company reaffirmed its full year guidance for production in the range of 2.1 million ounces and cost of sales of $970 per ounce [15] Q&A Session Summary Question: Potential design changes at Great Bear - Management indicated that the resource growth is an extension rather than a design change, with a focus on transitioning to a full underground mine [32] Question: Outlook for Tasiast grades - Management noted that while grades are strong, a drop-off is expected in Q4, with adjustments to mine sequencing being considered [34] Question: Debt reduction targets - Management aims to reduce net debt to below 1 times EBITDA, with a focus on repaying the remaining $100 million on the credit facility [36][38] Question: Paracatu grades in the second half - Management expects grades to be slightly higher than the first half but lower than previous years due to mining sequences [42] Question: Cost structure and inflationary pressures - Management acknowledged some relief in certain areas but overall costs are expected to align with the previously factored 5% increase [75]