Kinross Gold Corp (KGC) June 2026 Conference Transcript

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kenross Gold First Quarter 2026 Results Conference Call and Webcast. I would now like to turn the call over to David Shaver, Executive Vice President.

Thank you, and good morning. In the room with us today on the call, we have Paul Rowlandson, CEO, and from the Kenross Senior Leadership Team, Andrea Freeborough, Claude Schimper, Will Dunford, and Jeff 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 3 of this presentation, our news release dated April 29th, 2026, the MDNA for the period ended March 31st, 2026, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

Thanks, David, and thank you all for joining us. This morning, I will discuss our first quarter results provide high-level updates from across our portfolio comment on sustainability and confirm our outlook i will then hand the call over to the team to provide further details following our outstanding performance in 2025 we continue to deliver strong results in the first quarter Our culture of technical excellence and financial discipline, combined with the recent gold prices, resulted in strong operating margins, which again outpaced the increase in the gold price. As a result, in Q1, we delivered our fourth consecutive quarter of record free cash flow of approximately $840 million. dollars. Our financial position and cash flow outlook remain excellent, and we continue to return meaningful capital to our shareholders through buybacks and our quarterly dividend. We are targeting to return approximately 40 percent of our free cash flow in 2026, and in Q1, we continued our buyback program. Turning now to operational highlights, Q1 was a great start to the year, with production of 493,000 ounces. Both Tassius and Perica II had strong quarters, and together accounted for more than half of our production, driving significant free cash flow. Perica II delivered another excellent quarter on the back of record no recoveries, and Tassius saw strong output in Q1, supported by higher grades and strong recoveries. With regards to our projects, we continue to make strong progress in Q1 across our pipeline of mine life extensions and growth projects. In the U.S., the team continues to advance the three projects we announced in January. At Great Bear, both the Advanced Exploration Program and the main project are progressing well with key permitting milestones achieved, which Jeff will comment on later. At Lobo Marte in Chile, I'm pleased to report that we submitted the Environmental Impact Assessment earlier this month, marking a significant milestone as we formally initiate the permitting process. And we look forward to providing a Lobo Marte update in the second half of the year. starting out as sustainability our annual sustainability report will be published later this quarter this comprehensive report which is in its 18th edition provides an update on all the progress we've made in 2025 and what we aim to accomplish this year and beyond starting through our outlook following a strong first quarter we are on track to achieve our production cost and capital guidance again this year more specifically on costs given the recent geopolitical events i would highlight that we continue to benefit from an attractive relative cost position which is supported by our long-standing approach to mitigating cost pressures this includes among other things our great enhancement and hedging strategies Andrea will comment on our hedge book strategy later. With respect to grade enhancement, we have Phase X, Curly, Grape Bear, and Lobo Marte, all bringing higher-grade ore into our future production profile. Looking forward, we will continue to maintain our financial discipline and prioritize cost management to consistently deliver strong margins and free cash flow. With that, I'll now turn the call over to Andrea.

Thanks, Paul. This morning, I'll review our financial highlights from the first quarter, provide an overview of our balance sheet and returning capital, and comment on our outlook. As Paul noted, Q1 was a strong start to the year for us. We produced 493,000 gold equivalent ounces as planned. Q1 cost of sales of $1,380 per ounce, and all in sustaining costs of $1,732 per ounce were also on plan. Margins were a record $3,476 per ounce and outpaced the increase in the gold price. Our adjusted earnings were $0.71 per share, and our adjusted operating cash flow was a record $1.1 billion. dollars. Our earnings and adjusted earnings were impacted by the timing of a 65 million dollar withholding tax expense recorded in Q1 but pertaining to tax payable in future quarters. This accounting requirement caused our earnings per share to be lower by five cents and skewed our effective tax rate higher in Q1. We expect our effective tax rate to be lower from Q2 to Q4 and our full-year effective tax rate to be within our guidance range of 28 to 33 percent. Our taxes paid are also expected to be in line with guidance, with approximately 70 percent of our payments expected in the first half of the year. Attributable free cash flow was a record 838 million dollars, despite making significant tax payments of approximately 450 million dollars in Q1, largely related to 2025 earnings. Turning now to our balance sheet, our financial position continued to strengthen in Q1 as we added $440 million in cash after funding our planned CapEx and returning $300 million to shareholders. We ended the quarter with $2.2 billion in cash, $3.9 billion of total liquidity, and $1.4 billion in net cash. With respect to return of capital, we're targeting to return approximately 40% of our free cash flow back to shareholders through both dividends and share repurchases. Our shares continue to remain a strong return on invested capital, considering our tracked evaluation and free cash flow yields. In Q1, we repurchased a total of $250 million in shares, representing approximately 7.7 million shares, or 0.6% of our shares outstanding. Subsequent to Q1, we repurchased an additional $50 million in shares. I'm pleased to report that since we restarted our share repurchases one year ago, we repurchased approximately $900 million in shares, representing over 3% of our outstanding share count. Including our quarterly dividends, we've returned approximately $350 million to date in 2026, and over $1 billion since the first quarter of 2025. Turning now to our guidance, following Q1, we remain solidly on track to produce 2 million ounces at a cost of sales of $1,360 per ounce and all in sustaining costs of $1,730 per ounce. And we're also on track with our capital guidance of $1.5 billion. As a reminder, our cost guidance was based on a $4,500 gold price and a $70 per barrel oil price. In terms of production, the second quarter is expected to be in line with our first quarter. As a result, the second half is expected to be slightly higher than the first half to meet our full year production guidance. In terms of operating costs, we expect costs to be relatively stable throughout the year. Given the current situation of elevated oil prices, we're providing additional information on our oil price sensitivity. To start, I will note that impacts of higher oil prices within the first quarter were minimal. Fuel currently represents approximately 11% of our total cost, and as I noted earlier, our 2026 cost guidance was based on $70 oil. Our stated sensitivity is for every $10 per barrel change in price, we expect an impact of three dollars per ounce on our cost of sales. This captures the direct impact of crude oil prices on refined products that are used in our operation, primarily fuel and including diesel. However, in the current volatile environment and contemplating other factors that impact the price of refined products, such as refining, distribution, and taxes, the sensitivity for 2026 is estimated to be $10 per ounce for every $10 per barrel change. This impact is not overly significant. To put it in perspective, if the oil price stays at $100 for the remainder of the year, we would expect an impact of approximately $20 per ounce on our full year oil and sustaining costs, representing approximately 1%. And if we go one step further and consider potential secondary cost inflation from a prolonged elevated oil price on other consumables and freight. We estimate a further $10 potential impact for a total $30 per ounce to our full year all-insustaining cost guidance, representing less than 2%. Overall, putting cost sensitivities into context, our great enhancement strategy, which started in 2022, has already put us in an attractive relative cost position. And in the short term, we're not expecting a significant impact on our costs because of higher oil prices. This is in part a result of our longstanding hedge strategy. We have favorable oil hedge positions in place under this program. For 2026, we've hedged 63% of the oil component of our fuel consumption at our U.S. and Cassius operations at an average price of $62 per barrel. This accounts for approximately 75% of our company-wide fuel consumption. And in the medium and long term, we have our grade enhancement strategy, bringing higher grade ore into our future production profile and providing organic offsets to inflationary pressure.

Lastly, in terms of supply of fuel and other consumables, we're not currently experiencing any disruptions at our operations and we continue to receive regular delivery i'll now turn the call over to claude thank you andrea i'd like to start with our safety culture this quarter we have continued to focus on our safe ground brand through practical leadership training with a focus on prevention of high potential incidents visible leadership activities are engaging the workforce and strengthening our safety excellence program which is resulting in a strong leading indicator. Starting with Parakeet 2, the mine had an outstanding quarter with strong production driving significant free cash flow. Production of 161,000 ounces increased over the prior quarter due to record mill recoveries driven by continuous improvement programs across the processing plot. The initiatives included enhancements to the CIL circuit, improved operational controls and carbon management practices as well as targeted improvements in the acacia reactor performance cost of sales of $1,119 per hour increased over the prior quarter and Parakeet 2 remains on track to meet its guidance of 600,000 ounces at a target cost of sales of $1,240 per hour. TASIUS had another strong quarter Production of 130,000 ounces increased over the prior quarter, and cost of sales of $990 per ounce decreased over the prior quarter due to strong grades. Continuous improvement efforts at the TASIUS solar facility has led to 15.5 gigawatts of power generation, counting for 23% of the site power in the first quarter, and offsetting 3.5 million litres of hydrocarbons. TASX remains on track to meet its guidance of 505,000 ounces at a target cost of $1,050 per hour. At the Kuiper, we produce 54,000 ounces at a cost of sales of $1,526 per hour. Production decreased over the prior quarter due to a planned 16-day mill shutdown, which also included several opportunistic continuous improvement initiatives aimed at increasing reliability and uptime in the plant. Drades and production are expected to increase in the second and third quarters as we mine phase seven all. Quoco remains on track to meet its guidance of 210,000 ounces and a target cost of sales of $1,320 per hour. Now moving to our U.S. operations, production was higher quarter over quarter benefiting from strong contributions from Fort Knox and Mantone, Alaska. Combined, the U.S. site delivered production of 148,000 ounces at a cost of sales of $1,982 per ounce. At Fort Knox, first quarter production of 94,000 ounces and cost of sales of $1,761 per ounce was higher than the prior quarter due to timing of the ounces processed through the mill and the heat pitch fans. At Bald Mountain, production of 28,000 ounces was lower than the prior quarter due to the timing of ounces recovered from the heat leach fats. Cost of sales of $1,934 per ounce was higher due to the fewer ounces produced. At Round Mountain, production of 26,000 ounces was lower quarter over quarter due to the processing of lower grade, lower recover stockpile feed as we continue to transition towards higher grade, higher recovery oil from phase S in the second half of the year. Our cost of sales was $2,776 per ounce was higher due to the few ounces produced. With that, I will now force the floor over to William.

Thanks, Claude. Recall our project pipeline is backed by significant resource inventory with over 27 million ounces of M&I plus an additional 17 million ounces of infert, all calculated at $2,500 per ounce. This includes several projects across our portfolio that our in-house technical team is advancing while also leveraging ongoing exploration to support future production potential. We continue to see several value-creating investment opportunities emerging across our portfolio to leverage the strong gold price and enhance our production profile in the 2030s and beyond. The three high return projects in the U.S. which we announced earlier this year are strong examples of the from that extent of resource inventory into our production profile enhancing our asset value projects and operations teams are making excellent progress across all three of these projects at phase x around mountain we are pleased to announce that we have received all major operational permits ahead of schedule including the federal permit to increase our underground mining rate above 3 000 times per day in terms of the project underground development is well advanced with 7.2 kilometers completed to date we've already exceeded the planned development rate of 12 meters per day for 2026 and they're slightly ahead of schedule which significantly de-risks our path to first production in 2028 engineering work for is advancing well procurement of long lead items such as the mining equipment is underway at ball mountain mining of redbird is advancing well fully realizing the anticipated efficiency benefits of mining closer to quayside infrastructure with improved equipment utilization construction of processing infrastructure for redbird extensions and detailed engineering of the start plant is also progressing well turning to our curly project in washington with a mild winter we had a successful construction season allowing us to make good progress on project infrastructure detailed engineering for the mill refurbishment is largely complete and procurement is well underway. We have selected a contractor for the mill refurbishment mobilization activities commencing in Q2. We also pulled forward some underground mining development into Q1 to de-risk our mine plan and first production. In parallel, we continue to progress exploration at Curlew, strong results both at North-Self and at the Roadrunner Zone, which provides potential to enhance and extend the mine plan. As you can see on the slide, at North-Self, we intersected 12.5 meters at 7 grams per ton, 4.5 meters at 8.5 grams per ton, and at Roadrunner we intersected 2.4 meters at 9 grams per ton. With the U.S. project advancing well and expected to come online in 2028, our team is also focused on advancing studies on opportunities across our resource base that are value accretive to our production profile in the 2030s. Here you can see updates on a few of those opportunities. At Bald Mountain, technical studies are underway for the next layback, the top open pit, which has potential to extend production in the 2030s. The top pit would be sequenced after Redbird and is the next potential anchor pit, with a current indicated resource of approximately 1 million ounces. Similar to Redbird, the top open pit is the layback of an existing pit, and we will be exploring and studying additional satellite pit optionality to bring in alongside this anchor pit. At Fort Knox, we are progressing technical studies focused on advancing Phase 11, which is the next layback of the current open pit mine following the same well-understood orb body at depth. Phase 11 resource contains approximately 2 million ounces and has the potential to start producing in the early 2030s, meaningfully extending mine length of Fort Knox. Additionally, we are setting optionality to mine the GIL satellite deposit alongside the current Phase 10 and future Phase 11 to augment our overall production profile in Alaska. Moving across to Chile, at La Coipa, last year we submitted an environmental impact assessment for the Pure N4 extension, and we remain on track with our permitting timeline. Pure N4 is also a layback of a prior pit, which we expect to extend production into the early 30s, at which point we plan to transition to Lobo Marte. Lastly, at Lobo Marte, we submitted our EIA earlier this month, commencing our regulatory review process. Global Marte is expected to be a low-in-life, low-strip, low-cost heap leach operation with potential to produce 4.7 million ounces over a 16-year mine life. The strong heap leach grade of 1.3 grand per tonne and significant production potential of three to four hundred thousand ounces per year makes this an anchor tenant in our grade enhancement strategy alongside Grave Bear in the 2030s, providing significant free cash flow with a low expected ASEC. We are in the process of updating and reviewing the 2021 FS for Lobo while progressing our permitting and will provide a more fulsome project update in the second half of the year. I will now hand it over to Jeff for an update on permitting at Great Bear.

Thanks, Will. In terms of our advanced exploration, I am pleased to announce that we have now received the remaining permits from the Ontario Ministry of environment conservation and parks this is a testament to the team at kenross and the ministry of environment conservation and parks under the leadership of minister mccarthy to continue to advance the permanent process forward turning to the main project we continue to advance permitting with both federal and provincial authorities federally and as planned we submitted the third and final phase of the impact statement to the Impact Assessment Agency of Canada in Q1, and we will continue to work with them as they progress their review and obtain public and Indigenous input. As a reminder, receiving the final impact assessment report is the critical first step to obtaining other federal and provincial permits we require to construct and operate the Great Bear Mine. We would require this final report in certain provincial early works and construction permits in the spring of 2027 to allow us to take advantage of the summer construction season in order to maintain targeted first production in late 2029. Provincially, we continue to work with the Ontario authorities to advance the permitting process for the main project under the One Project, One Process, which is overseen by the Ministry of Energy and Mines. One Project, One Process is a multi-phase process. We have submitted our final project description and are awaiting final approval from the Ministry of Mines and Energy so that we can proceed to the next phase, which is the Integrated Authorization and Permitting Plan. submission of individual ontario permits will proceed in accordance with this plan once approved by the ministry of mines and energy on the indigenous community front we continue to progress the negotiation of benefits agreements we are pleased to report that in relation to laxul and wabiscang first nations on whose traditional territory the main project resides negotiations on the impact and benefits agreement continue to advance based on a recently signed

and confidential memorandum of understanding that captures the key economic compensatory and procurement elements with that i will now turn it back to will for a technical project updated on grade bear thanks jeff at great bear work on the aex program and the main project is progressing well with final aex permits in place we expect to commence construction of the aex decline this summer the aex decline will provide drilling access for exploration and extension of the underground resource as well as delineation work in terms of the main project with the impact assessment now submitted we have already started to make meaningful progress on procurement with early packages awarded and requests for proposal issued across several work streams including key mill equipment. Detailed engineering is also advancing well and is approximately 45% complete. Upon completion of detailed engineering in early 2027, we will provide an update on the initial capital. This update will include both the impact from inflation since the 2024 PEA estimate and the impacts of any scope changes and enhancements we make as we move through detailed engineering. As an example, we've been progressing detailed engineering alongside permitting and through that work we have chosen to enhance the scope in select areas including water management these enhancements go beyond standard practices and reflect a proactive approach to environmental protection given the long expected mine life of the asset through detailed engineering we are working to ensure we are building a robust reliable world class operation given the multi-decade potential high margin production we see at this asset Turning now to exploration, we continue to see positive results that are validating that view of potential for multi-decade, high-grade operation at Great Bear. 2026 exploration is focused on our 18-kilometer LP structural corridor, as you can see on the slide. Drilling identified a new zone of mineralization 2.4 kilometers on strike from the southeast edge of the LP resource, called the Strider Zone, where drilling intercepted encouraging weds around two meters at double-digit rates. Drilling is continuing in this area, following the structure on strike and down dip to define the extent of mineralization. With that, I will now turn it back to Paul for closing.

Thanks. Well, after a strong start to the year, we are well positioned to meet our targets in 2026, and we have a strong set of upcoming milestones this year, which include ongoing return of capital to our dividend and share repurchases, continued strengthening of our balance sheet supported by strong operational performance and cash flow generation, advancing our project's pipeline, including the U.S. projects we discussed in January, as well as Great Barron Logo Marte, and continued exploration and studies of our resource inventory to bring in new projects to extend my lives looking forward we are excited about our future we have a strong production profile we have an attractive relative cost position we are generating significant free cash flow we have an excellent balance sheet we have an attractive return of capital we have an exciting pipeline of both exploration and development opportunities. We are growing our net asset value and our per share metrics, and we are very proud of our commitment to responsible mining that continues to make us a leader in sustainability. In closing, we believe that our shares offer attractive relative value across a number of metrics. And with that operator, I'd like to open up the line for questions.

To ask a question, simply press star one on your telephone keypad. Again, that is star one to ask a question. And your first question comes from the line of John Wilson with RBC Capital Markets. Please go ahead.

Hi, thank you very much. First question is on Great Bear. With the AEX permit now in place, what is the pathway to be able to start some of that deeper exploration? Basically, what time frame would you be at the levels that you'd need to be at to start some of that deeper exploration?

I mean, the time frame now, the key path, there's more work we just need to do over the summer once we thaw on water management to get ready for underground decline. So we expect August or September to actually be blasting and getting underground. And following that, obviously, we're going to focus in a few different areas at the beginning. We'll do infill and extensional drilling in the main part of the LP ore body. There's also hinge and limb, which wasn't in our PEA, which we'll hopefully explore over the next couple of years. So I think it's progressive, really. It's, you know, we won't be deep at the very bottom of the ore body for a number of years. We'll kind of follow ahead of the mining.

Great. Thank you. And then back to sort of the conversation on inflation, you know, the company has some very good protections in place with the hedges. I guess sort of two parts of this question. One is when you're looking at the non-energy related items, you know, reagents, labor and so forth, I'm curious to know, you know, where is inflation tracking into next year? And then also, you know, when you're thinking about these capital updates for Lobo Marte as well as Great Bear. What's the sort of thought process there in terms of CapEx inflation trends? Thank you.

Hi, Josh. It's Andrea. On inflation more broadly, I'd say we included a 5% inflation factor in our cost guidance back in February. So we're still on track for that. It's early in the year, and we'll see where things go with oil price and fuel costs and energy-related costs we've given the sensitivities. But as we sit here today, we're still feeling good about the 5% overall inflation tax.

And then maybe just to jump in there as well, as it relates to capital for both Lobo Marte and Great Bear, look, I think, yeah, it's there. I don't think inflation is going away. Our PEA, which we put out in 24. At some point in the future here, we're expecting to update, but there will definitely be an inflation component as between where we started with the numbers in 24 and where we're likely to end up. I think you'll see that on both projects. Really just a macro effect, really, you know, something we're going to be price receivers on. We'll continue to want to sharpen our pencils where we can, but we're working in that overall macro-inflation environment.

Great. Thank you.

Your next question comes from the line of Bahaed Tariq with Jeffries. Please go ahead.

Hi. Thanks for taking my question. Maybe first on TASIA's grades, they were really high, I think the highest since the third quarter of 2024. just the outlook for grades through the rest of this year, that would be really helpful.

Yeah, Fahad, thanks for the question. Yeah, you know, we're working through different areas. We're finishing off on West Branch 4, and that's why the grades were higher. We still had some of that stockpile inventory, and we pushed that through in the first quarter. We expect it to taper off for the rest of the year, slightly lower. but we are constantly looking at opportunities to obviously enhance what we're putting out from TASIs.

Okay, and then maybe just staying in Mauritania, can you just remind us, so diesel prices are regulated, I believe, by the government, so that probably factors into the sensitivity you provided, if you could confirm that, and then also anything you've heard in terms of security of supplies specifically in Mauritania? Thanks.

I'll hit the So, first of all, the diesel prices are regulated by the government for the country, but not necessarily for us. We have long-term contracts with the suppliers coming to our system, so both for HF and fuel. And then the second part of it, from a supply point of view, it's very similar to Brazil and these other countries. we don't get our product from the Middle East. It comes from the other side of the track. So, we don't have an issue with supply. The impact will be on the unhedged fuel from a cost point of view. We don't have an issue with supply.

Okay. That's super clear. Thank you.

Our next question comes from the line of Ralph Profiti with Stifel Financial. Please go ahead.

Thanks very much. The Global Mart Day EIA submission would have had to, as a baseline, include some type of water usage strategy. Just wondering what that baseline is and what can you tell us about the strategy around that?

Sure, maybe I'll start and Wilkie jump in. I mean, it's a good question, Ralph. I mean, our whole Chile strategy is really around what is our water strategy. And as you may recall, you know, whilst we have many thousands of liters of water rights, what really matters is permitted pumping capability. And we have permitted pumping wells that have been running for many years. And that's a good thing because with pumping comes monitoring. So, as we've been pumping, we have monitoring wells, and we've got a very strong history of monitoring, but there's absolutely no detrimental impact to our drop. So, our strategy, really, we call it our base case, because there are upsides, but the base case is that we uh the water wells that we're currently using uh supply la cuppa they're actually physically closer to lobo martin and uh we've we've spoken with the regulators uh there's no guarantee with regulators but the concept is you know we take that existing permitted pumping uh water and we just move it in a different direction closer to lobo that would be our base case um using the water we already have we've got many years of history and monitoring the

upsides from there really uh relate to if we could get more water and we've got a few initiatives underway we could actually do more but as it relates to lobo the linear factor is that a permanent pumping capability sorry well did you want to add no i mean i think that's exactly right that's what we submitted in the eia lobo is the exact same you know water consumption uh that we have at la coiba so it's been designed that way for the eia so that as you said we just continue to use the same water with well-proven history so all of that water modeling and data has already gone into the EIA submission providing that strong base case and then we're working on all that other you know you mentioned the water rights we're working on all of those water rights to identify other water potential water sources for quite the longer term or other optionality in Chile.

I agree yeah that's very helpful and just as a sort of a minor follow-up I'm looking at the Round Mountain recoveries for the quarter and just wondering is that sort of the normal you know, gray and recovery relationship there? Was that expected? And, you know, is there any change in the metallurgical assumptions around sort of that phase X underground transition when I think about those recoveries?

Yeah, multiple parts to that. So, you know, first of all, when we feed from those stockpiles relative to where we are in the pit at the time, and this was the first quarter was really a lot stockpile material that grade is significantly lower and then the grade recovery curve as you know changes so we anticipated that sort of recovery we're doing a whole bunch of things to continue to optimize that and then phase x is a different grade and 50 different piece very similar to what we had in phase w or higher up in phase w so we do see that recovery changing as we put different types of material through for the year um and yeah it remains our our focus point

okay great yeah i appreciate that clarity thank you your next question comes from the line of carrie mccurry with mechanical genuity please go ahead good morning and congrats on a strong start um just following up on the uh second half guidance being slightly higher than the first Just wondering what assets in particular we should be thinking about as stronger in the second half.

Sure, I'll start and someone else may want to jump in. I think, you know, the U.S. in particular we've pointed to as expected to be higher in the second half. Some of that is Brown Mountain as we expect, you know, higher production there as we get into the heart of BASA.

So we'll continue beyond plan at some point.

And then just follow up on the oil hedges. I think Andrea, you mentioned you're 75% hedged for 2026, was that the number in terms of exposure?

So we're 63% hedged for the exposures in the U.S. and at Cassius. That on the total portfolio is somewhere around 50%. We don't hedge in Brazil because there is price controls in Brazil. So the prices don't move necessarily directly with spot in Brazil. For example, so far since early March, we've seen prices increase everywhere else, except they've been pretty flat in Brazil.

Okay.

And then for 2027, we can kind of just- I think that 75% comment was the U.S. and TASIUS make up 75% of our fuel usage.

Okay, got it. And then for 2027, I guess we could just parade based on the numbers on slide 11 there.

Yeah, sorry, 42%. We're 42% hedged for those, for U.S. and TASIUS for 2027. That's about 30% company-wide.

Which one, we'll look at opportunities to chip away at. Okay, that's great.

And your next question comes from the line of Anita Sonny with CIBC World Markets. Please go ahead.

Hi, guys. Good morning, and congrats on a strong start.

I just wanted to ask, a lot of the questions I wanted to ask have been asked already about the TASIus grades and phase X grades, but just could you give us a little bit more um guidance or is it the same as it was at the beginning of the year on the cadence of sustaining capital and gross capital spend uh over the over the next few quarters sure i mean we were we were you know slower to start which is typical for us uh q1 is always um you know a bit of a lower capex quarter so we're still on track for uh for the full year with in particular the growth capital spending kind of ramping up on the U.S. project as we go through the year.

Okay, thanks. That's it for my questions.

And your next question comes from the line of Tanya Dekuskonik with Scotiabank. Please go ahead.

Oh, great. Good morning, everybody. Thank you for taking my question. Andrea, can I just come back? And you mentioned that you're seeing no issues in terms of getting supplies to mine sites, et cetera. Is there anything with your suppliers that you talk to that they are monitoring? Just, you know, things are moving now, but is there anything tight that they're watching?

Yeah, it's Claude. I'll take that. From a supplier point of view, globally, as our teams work and these things change because it's quite dynamic, we do follow up with the suppliers on a consistent basis. Obviously, for us, it's about what's the high-priority items, explosives, cyanide, these kinds of things. And we haven't seen any tension from any of them yet. You'll recall that a couple of years ago with the issue in Ukraine, we shifted a lot of where our supply comes from, along with our suppliers of explosives, cyanide, all those types of things live. So, we feel like we're in pretty good shape just in the current state.

Okay. So, they're not seeing anything. So, that would imply, Andrea, I shouldn't see increase in, you know, working at mine sites.

You're not accumulating anything there. um we are we are targeting uh more fuel in country uh for cassia so there was already a little bit of a build up um a supplies inventory you know starting in march but nothing overly significant we're not going back to the covet period no no okay um and my second question is So on the costing side, you know, we talked about fuel a lot and thank you for that information.

That's very helpful. But I wanted to come back and focus on labor as well. I mean, you mentioned, you know, number one, I want to understand whether you are seeing any tightness in the labor market and any contracts that you are seeing that are renewed for this year, you have to renew? And is that aligned with your 5% inflation estimate?

No, Tanya, as we mentioned in the previous quarter, we have now signed the major sites that have collective labor agreements. Tazias, Brazil, and Chile, we have signed all of those agreements with the teams for the longer term. Chile's a two-year, Tazias is a five-year, and Brazil is a three-year. So we're in pretty good shape this year when it comes to that. From a labor supply point of view, there's always tension in the system, but we're seeing a lot less turnover in Nevada than we're used to. we're in reasonable shape. So from a supply point of view, it's fine. And then from an agreement point of view, it's relative to the other than the inflation, as Andrea mentioned, we don't see any pressures at this point.

Okay. Because on your side, you mentioned that you have a strategy for your hedging, so your fuel, your currencies, and then your grade optimization as we get better grades. I'm just wondering if your productivity and your turnover is where you want it to be as well.

Yeah, like I said, certainly with the big three labor groups, we continue to focus on being the employer of choice. And certainly those areas we believe have been quite successful, but it doesn't take us to the focal point. And then just from a point of view of cost. As I said, there's no pressure.

Okay. Thank you.

And our final question is from the line of Lawson Winder with Bank of America Securities. Please go ahead.

Thank you, Operator. Good morning, Paul and team. Thank you for today's update. You submitted the Lobo Marte Environmental Impact Assessment in April. So that formally starts the permitting process, and you are expecting to provide an additional update in the second half. what are you anticipating in terms of uh timelines at this point and you know what i'm ultimately getting at is you know when do we expect a full funds decision and then you know when when should we be thinking about penciling in first production just conceptually even if we're not going to put in our models yet thanks yeah maybe i'll i'll start and then and then turn it over to to others but but but you know with the eia you're you're sort of looking at a a couple of years to kind to complete that process yeah and then again you know so again cadence you know following that

couple of standard i would say pre-standard a couple of years of work to finalize the impact statement then you're into uh you know the sort of the approvals the early works and the construction which would at a minimum be another couple of years i think when you take all of that and we've always anticipated Lobo to come in behind Great Bear in the early 30s. So that's kind of what we've got in our timeline. We always look at opportunities for schedule compression, but I think we're comfortable saying early 30s in behind Great Bear.

Okay. Thank you for that. And then if I could ask on the solar power at Tassie, I mean, it appears there's been a clear cost benefit to that are you able to quantify the cost benefit from the solar so for example i mean if there were no solar in q1 versus uh you know a full exposure to um self self-generate um with with heavy fuel or diesel i mean do you have a sense of what that benefit would have would be and then and then like taking that to the next conclusion to what extent could you expand solar capacity at TASIUS, you know, particularly considering the stability of the overall electrical supply?

So, I mean, the calculation is pretty simple. It's about 14 million liters of fuel that is additionally transport and then used at the fuel cost. So, for us, right now, it's representing 22 to 24 percent of our electricity supply to the whole site. So, it is significant. To your point on expansion, the challenge is the system, 25% is a quarter of the day. So it works through daylight hours. The real issue is battery capacity. So adding additional solar panels will not influence it in any way because we reach the peak supply of power for the site. So you're just going to create power that you won't be able to use.

Storage is the bottleneck.

Storage is the bottleneck for those very large capacity plants.

But I think, glad to add, I mean, you know, the solar plant was really kind of the first beachhead. We got the direct savings on fuel, but now we're established with the beachhead. We've got buses, light vehicles, more and more. use of battery-powered light vehicles at site, and I could see that trend continuing.

Yeah, so, and as we look at the larger mining fleet as well, we're starting to look at how do we capitalize on using that solar piece. And then the other part now is looking at the opportunity for wind, and we're currently doing a wind study as well in the area. So I'm looking at a lot of different alternatives to heavy fuel.

Okay, that's very helpful. And if I could just ask just one quick clarification question on Fort Knox. The conveyor belt repairs during the quarter, I guess they were unexpected, and that's why they were backed out of earnings for adjusted earnings. But just any additional costs or shutdowns expected with that for the balance of the year?

No, the incident didn't have any impact on our actual production and process. It's given us the opportunity to refurbish a 50-year-old installation, and we're right on track. And ironically, right at this point, we're busy doing commissioning and testing of the new system, and we've replaced nearly a kilometer of belt. And so we're on track, and we expect the operation to just continue as normal. Fantastic. Thank you very much.

And with no further questions in queue, I will now hand the call back over to Ken Roskulls for closing remarks.

Great. Thank you, Operator. And thanks, everyone, for joining us this morning. We look forward to catching up with you in person in the coming weeks. Thanks for joining us.

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.