• Operating Margins: Increased by 14% over the prior quarter.
• Free Cash Flow: Record quarterly free cash flow of $415 million, a 20% increase compared to the prior quarter.
• Production: 564,000 ounces at a cost of sales of under $1,000 per ounce.
• Cost of Sales: $980 per ounce, down from $1,029 per ounce in the prior quarter.
• Average Realized Gold Price: $2,477 per ounce.
• All-in Sustaining Cost: $1,350 per ounce, lower than the prior quarter.
• Adjusted Earnings: 24 per share.
• Adjusted Operating Cash Flow: $625 million.
• Capital Expenditures: $276 million in Q3.
• Debt Repayment: $650 million repaid out of the $1 billion term loan.
• Net Debt to EBITDA: Reduced from 1.7 times to 0.5 times as of the end of Q3.
• Production Guidance: On track for full-year production of 2.1 million ounces.

• Warning! GuruFocus has detected 7 Warning Signs with KGC.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kinross Gold Corp (NYSE:KGC) reported a strong third quarter with production, cost, and cash flow all improving over the prior quarter.
• The company generated record quarterly free cash flow of $415 million, a 20% increase compared to the prior quarter.
• Kinross Gold Corp (NYSE:KGC) has repaid $650 million of its $1 billion term loan, strengthening its balance sheet.
• The company is on track to meet its full-year production and cost guidance, with strong year-to-date performance.
• Kinross Gold Corp (NYSE:KGC) continues to advance its exploration and development projects, including Great Bear and Lobo Marte, which show significant potential for future production.

Negative Points

• Kinross Gold Corp (NYSE:KGC) anticipates lower production next year due to mine plan sequencing, particularly at its lowest-cost asset, Tasiast.
• The company is facing inflationary pressures, with labor costs expected to increase by 5-6% and overall inflation averaging around 3%.
• Production at Bald Mountain is expected to taper off after next year unless new projects are approved.
• Round Mountain is expected to have lower production next year as the company transitions to new mining phases.
• Kinross Gold Corp (NYSE:KGC) is still in the budgeting process, and there is uncertainty regarding future capital expenditures and cost structures.

Q & A Highlights

Q: Can you provide insights into the sustainability of the strong results from Mancho, particularly regarding throughput and grade? A: Claude Schimper, Executive Vice-President and Chief Operating Officer, explained that they have reached a stable production rate, milling approximately 180,000 to 200,000 tons per quarter. The grade is expected to remain consistent with feasibility studies, ensuring stable performance.

Q: What is the outlook for capital expenditures (CapEx) in the coming years, considering inflation and project evaluations? A: Andrea S. Freeborough, Executive Vice-President and Chief Financial Officer, stated that while they are still in the budgeting process, CapEx is expected to be not significantly above this year's $1.05 billion, with adjustments for inflation.

Q: With strong cash generation and debt repayment, how will Kinross allocate free cash flow moving forward? A: J.Paul Rollinson, Chief Executive Officer, emphasized that their capital allocation philosophy remains consistent, focusing on business needs, maintaining the balance sheet, and considering internal growth versus return of capital. Future decisions will be gold price dependent.

Q: Could you provide clarity on Bald Mountain's production outlook and potential future projects? A: William D. Dunford, Senior Vice-President, Technical Services, mentioned that Bald Mountain's production is expected to be stable next year, with potential tapering off afterward. They are exploring additional pits and laybacks to extend the production profile.

Q: What are the expected impacts on costs next year, considering lower production, higher gold prices, and inflation? A: Andrea S. Freeborough noted that they are still in the budgeting process, but expect labor inflation around 5-6% and overall inflation averaging around 3%. Costs may rise towards the higher end of a 5-10% increase over 2024.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.